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Investment Feature

Autor:   •  April 19, 2017  •  Research Paper  •  968 Words (4 Pages)  •  33 Views

Page 1 of 4
  1. Characteristics

        1.1 Definition:

An investment company is a nonbank financial intermediary that attracts idle money from various sources to invest in stocks, bonds, currencies or other assets. Every investor participating in an investment fund will own a portion of the total portfolio. This holding is reflected in the ownership of investment fund certificates

        1.2 Functions:

  • Reduce risk by diversifying investment
  • Cost saving but still  profitable results
  • Professional managements
  • Closely monitored by competent authorities
  • The dynamics of the investment fund

2.  Types of investment funds

2.1 Based on size and method of capital contribution

        2.1.1 Closed_end funds:

        This is the only form of a certificate issuing fund when mobilizing capital for a fund and the fund fails to buy back shares or investment certificates when investors wish to resell. In order to create liquidity for this fund, after the capital mobilization (or closure) is completed, the certificates will be listed on the stock market. Investors can buy or sell to retrieve their equity or investment certificates through the secondary market. Total fixed and fixed capital mobilization throughout the life of the fund. This new closed-end fund is being used in Vietnam, which is VF1 investment fund raised by VFM and managed by VFM

         2.1.2 Open end funds

Unlike closed-end funds, open-end funds fluctuate on a day-to-day basis as it is characterized by the ability of investors to resell fund certificates to funds, and the fund must acquire certificates at net value at the time of the transaction. In the form of this fund, fund certificates are not listed on the stock market. Due to the high liquidity requirements, this type of open-end fund only exists in countries with developed economies and stock markets such as Europe, USA, Canada ... and not present in Vietnam.

 2.2 Based on the organization, operation of the fund

        2.2.1 Corporate investment funds

        In this model, an investment fund is a legal entity, ie a company formed in accordance with the laws of each country. The highest executive body of the fund is the board elected by the shareholders (the investor), whose main task is to manage the fund's entire operation, select fund management companies and monitor the operations. The investment company's fund management and the right to change the fund management company. In this model, the fund management company acts as an investment advisor, responsible for conducting investment analysis, portfolio management and other business administration tasks. This model has not appeared in Vietnam because according to regulations of SSC, the fund has no legal status.

        2.2.2 Unit Investment Trust

This is an investment trust fund. Unlike the corporate investment fund model, this investment fund model is not a legal entity. The fund management company establishes the fund, conducts the capital mobilization, performs the investment according to the objectives set out in the fund charter. In addition, the supervisory bank plays the role of preserving the capital and assets of the relationship fund between the fund management company and the supervisory bank, which is represented by a supervisory contract which defines the rights and obligations. Of the two sides in the implementation and supervision of investment. An investor is a person who contributes capital to the fund and entrusts the investment to the fund management company to ensure the highest profitability from their capital contribution.

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