What is an Investment Fund?


An investment fund is a pool of assets (capital) collected from multiple investors (investment partners) sharing the same goals to invest in various assets such as stocks, bonds, real estate, commodities, and other securities. The fund is managed by professional portfolio managers at management companies (General Partners, like Quantillion) who make investment decisions and manage the portfolio on behalf of the fund's investors.

The foundation to the popularity of funds was laid by Harry Markowitz (born in 1927) with his portfolio theory as he proved that dispersion of a portfolio allows investment risks to be reduced considerably without the rate of return suffering in the long run. Funds operating according to today’s principles were first created in the US in the 1920s.

There are many different types of investment funds, including mutual funds, exchange-traded funds (ETFs), hedge funds, and private equity funds, each with its own unique set of features and investment objectives. Some funds focus on generating income, while others aim for capital growth or a combination of both. By investing in a fund, investment partners can diversify their investments and spread their risk over many assets, which can help mitigate the impact of market fluctuations on their investments.

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Investment funds provide a way for investment partners to invest in a diverse range of assets and benefit from the expertise of professional fund managers.

If you consider investing your money in a fund, you have to buy fund units by paying a subscription fee. Every unit represents a miniature model of the investment portfolio of the entire fund. For example, if the fund invests 5% of its assets in Bolt shares, then the holder of a one-hundred euro fund unit holds 5 euros worth of Bolt shares.

The net asset value of the investment fund (usually referred to by the abbreviation NAV) is calculated every business day – the assets belonging to the fund (shares, bonds, deposits, etc.) are valued and the obligations of the fund are deducted. Division of the net asset value of the fund with the number of units provides the NAV of the unit.

AIF or **Alternative Investment Fund in Estonia 🇪🇪 **

Any collective investment undertaking, including investment units thereof, which, collectively raises capital from a number of investors, with a view to investing it in accordance with a defined investment policy for the benefit of those investors and which harmonizes article 5 of the Directive 2009/65/EU into domestic legislation.

Net Asset Value or NAV

The value of the assets of a fund fewer liabilities allocated to it, including the accrual or payable amount for Management Fee, Performance Fee, and any other fees calculated as a percentage, if applicable, and as calculated in accordance with the provisions of the fund's Prospectus and/or its relevant Supplement, if applicable, and the provisions of the General Partner's Articles of Association.

The net asset value (NAV) of a fund is divided by the number of investment units issued by that fund, calculated on the applicable valuation day.

Valuation Day

A business day on which the NAV of a fund is determined and specified in the fund's Prospectus and/or its relevant Supplement, if applicable, or any other day as shall be determined by the General Partner from time to time.

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