Investment Fund

An Investment Fund is a collective investment vehicle that can be used to create diversified security portfolios (that support investment objective tasks).

• AKA: Fund, Managed Fund, Pooled Investment Vehicle.
• Context:
  • It can typically pool investor capital from multiple investors to purchase financial securitys collectively.
  • It can typically be managed by Investment Fund Manager who makes investment decisions on behalf of fund investors.
  • It can typically provide investor with ownership share while maintaining central fund management.
  • It can typically offer broader investment selection than individual investors could access independently.
  • It can typically leverage management expertise for security selection and portfolio construction.
  • It can typically reduce investment fees through economies of scale and shared costs.
  • It can typically calculate fund share value based on net asset value of underlying securitys.
  • ...
  • It can often implement specific investment strategy targeting investment goals, risk levels, and market sectors.
  • It can often provide regular reporting to fund investors regarding fund performance and fund holdings.
  • It can often distribute investment income in the form of dividends or interest payments.
  • It can often offer liquidity mechanisms for investor to purchase or redeem fund shares.
  • It can often be subject to regulatory oversight from financial regulators.
  • ...
  • It can range from being a Broad-Based Investment Fund to being a Focused Investment Fund, depending on its investment scope.
  • It can range from being a Conservative Investment Fund to being an Aggressive Investment Fund, depending on its risk profile.
  • It can range from being a Passive Investment Fund to being an Active Investment Fund, depending on its management style.
  • It can range from being a Retail Investment Fund to being an Institutional Investment Fund, depending on its investor access.
  • ...
  • It can integrate with Custodian Bank for security safekeeping.
  • It can support Trading Platform for share transactions.
  • It can connect to Fund Administrator for operational services.
  • It can utilize Compliance System for regulatory requirement fulfillment.
  • ...
• Examples:
  • Investment Fund Types, such as:
    • Mutual Funds, such as:
      • Equity Mutual Funds investing in stock portfolios for capital growth.
      • Bond Mutual Funds investing in fixed income securitys for interest income.
      • Balanced Mutual Funds investing in both stocks and bonds for diversified returns.
      • Index Mutual Funds tracking market indexes for passive investment.
    • Exchange-Traded Funds, such as:
      • Broad Market ETFs tracking major market indexes.
      • Sector ETFs focusing on specific industry sectors.
      • Global Index ETFs tracking international market indexes.
      • Bond ETFs providing exposure to bond market segments.
    • Hedge Funds, such as:
      • Long-Short Equity Hedge Funds employing long-short strategy.
      • Global Macro Hedge Funds trading based on macroeconomic trends.
      • Event-Driven Hedge Funds focusing on corporate events.
      • Multi-Strategy Hedge Funds combining multiple hedge fund approaches.
    • Money Market Funds, such as:
      • Government Money Market Funds investing in government securitys.
      • Prime Money Market Funds investing in short-term corporate debt.
      • Tax-Exempt Money Market Funds investing in municipal securitys.
    • Sovereign Wealth Funds, such as:
      • Norway Government Pension Fund Global managing Norwegian oil wealth.
      • Abu Dhabi Investment Authority managing Abu Dhabi oil revenue.
      • China Investment Corporation managing part of Chinese foreign exchange reserves.
  • Investment Fund Structures, such as:
    • Open-End Investment Funds allowing continuous share issuance and redemption.
    • Closed-End Investment Funds with fixed share count trading on exchanges.
    • Unit Investment Trusts with fixed portfolio and termination date.
    • Exchange-Traded Investment Funds combining fund structure with exchange tradability.
  • ...
• Counter-Examples:
  • Direct Security Investments, which lack pooled capital and professional management.
  • Bank Deposit Accounts, which focus on capital preservation rather than investment return.
  • Insurance Products, which primarily provide risk protection rather than investment growth.
  • Private Investment Accounts, which maintain separate asset ownership rather than pooled ownership.
  • Direct Real Estate Investments, which involve property ownership rather than security ownership.
• See: Collective Investment Scheme, Portfolio Management, Asset Management, Investment Company, Fund Distribution.

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References

2013

• http://investopedia.com/terms/i/investment-fund.asp
  • QUOTE: A supply of capital belonging to numerous investors that is used to collectively purchase securities while each investor retains ownership and control of his or her own shares. An investment fund provides a broader selection of investment opportunities, greater management expertise and lower investment fees than investors might be able to obtain on their own. Types of investment funds include mutual funds, exchange traded funds, money market funds and hedge funds. …

    … Individual investors do not make decisions about how a fund's assets should be invested. They simply choose which fund to invest in based on its goals, risk, fees and other factors. A fund manager actually oversees the fund and decides which securities it should hold, in what quantities and when they should be bought and sold. An investment fund can be broad-based, such as an index fund that tracks the S&P 500, or it can be tightly focused, such as an ETF that invests only in small technology stocks.

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