Mutual funds of the money market in Russia

One of the safest mutual funds are money market resources (financial intermediaries), although it all depends on the investment period. Those who invested money in them are insured against losing the main part of the deposits, but, on the other hand, the incomes of investors are so insignificant that inflation is consumed with time. So they will be needed for those who want to make cash in short-term programs. It is about these financial intermediaries and will be discussed.

Definition of mutual funds

Mutual funds are monetary injections, which are formed due to the pooling of a large number of depositors. Often, initial fees in some of them fluctuate in the amount of $ 300-500, and after the account is opened, subsequent investments can be in the form of any amount.

Regardless of the investment strategy and objectives, brokerage houses, investment companies act as founders of a fund or group of funds. For the convenience of the founders, their funds are easily transferred from the securities of one company to the other's paper without any commissions.

Mutual funds specialize in investing in hard metals, money market instruments, real estate. They are a package of bonds, shares, cash, managed by an investment company on behalf of and on the command of many investors. The pooled assets that belong to a mutual fund are called its portfolio. Each share of the portfolio is the proportional ownership of the investor in the assets of the fund, as well as part of the income that is generated from these assets.

Principle of operation

All mutual funds work almost the same way. They are formed by an investment company that sells their shares to depositors, then deposits the funds in securities portfolios. By combining the funds of the depositors in the portfolio, the head of the company can diversify the investments by acquiring bonds and shares in the fund.

Types of selectable tools set the goal of investment. For example, if the purpose of an investment company for shares is to proclaim capital gains, then the lion's share of funds is channeled into growth shares. If, however, the purpose of the bond fund is the payment of coupon income, which is not taxed, then the funds are invested in municipal bonds. At the same time, the investment company for bonds is formed through their issue in order to diversify the portfolio and reduce the risk of default on individual bonds.

Depositors are paid dividends, which are formed from income from securities, which form the main part of the portfolio. A client who invested $ 1000 will receive the same profit as the one who invested $ 100,000 in a percentage. The difference is that the income of the second depositor will be 100 times greater than that of the first investor (according to their proportions in the fund).

When there are changes in the value of securities in the portfolio, the value of the net assets of the financial intermediary also changes accordingly. The price fluctuations are influenced by risks inherent in many types of securities: political, economic, market.

Kinds

Mutual funds have several types, i.e. Depositors invest in bonds, shares, hybrid, commodity investment companies and in mutual funds of the money market.

Considering in detail all kinds of it can be said that these are mutual investments that sell their own shares and receive funds in securities of the money market. It is these companies from all the others that support the value of their securities at a constant level. Often the price and the estimated cost of the unit is $ 1. To keep the price on one level allows that short-term losses from the sale of securities, any expenses of the investment company are subtracted from the incomes received from investments. Such a result is most easily achieved by those funds that invest borrowed funds in short-term money market instruments, Such instruments have low price volatility.

Mutual money market funds are investments in securities that have a maturity of less than one year. Such companies are the least risky among other types. Very often they are used in their portfolios as a refuge when leaving the stock market, despite this, they sometimes give out a high yield.

Advantages of investing in mutual money market funds

1. Diversification is the redistribution of risks between several financial instruments.
2. Professional money management is the accompaniment of managers of an investment company of investors throughout the entire investment process.
3. Wide choose. The possibility of a wide choice of investments is provided by a considerable number of mutual funds (stocks, bonds, money market).
4. Liquidity - the investor can at any time sell its shares and return the funds.
5. Savings - the investor buys already ready portfolios of financial intermediaries, and does not make it out of the securities of individual corporations.
6. Protection of the investor and his rights - mutual funds are regulated at the federal legislative level through the Securities and Exchange Commission.
7. Convenience - shares can be sold or bought with the help of brokers, financial advisors, banks, insurance agents.

Risks of investing in mutual funds

One of the main ones is the risk of losing invested capital due to the decrease in the value of net assets (NAV). In addition, there are other risks:

• percentage;
• market;
• Connected with the quality of securities.

With the growth of market interest rates, there is a decrease in pressure on the bond and equity markets, which leads to a decrease in the NAV of bond and equity funds. Reducing market interest rates leads to the opposite effect.

The quality of securities is determined by the volatility of stock prices. Depositors are often concerned about the risk of insolvency of mutual investment companies. The value of their assets may decrease, but the likelihood of this is small. The way companies are set up minimizes the risks of bankruptcy and fraud.

Mutual funds in Russia

To date, the potential of Russian mutual funds has not yet been fully disclosed for several reasons:

1. In them, the inflow of long-term private investments is limited.
2. Investments in mutual funds of pension savings in the Russian Federation are prohibited by law.

These reasons limit the flow of funds to mutual investment companies, their increase is due to the recalculation of the value of portfolios and revaluation of transactions with assets. Mutual funds in Russia are small and do not allow the scale of business to be realized. The average size of Russian investment corporations is much lower than foreign ones.

As an example of the Russian mutual fund is OPIF "Sberbank - money market fund." Its goal is to obtain money by investing in short-term bonds of Russian issuers with high credit quality, due to the increase in the exchange value and the receipt of large income, as well as interest on short-term deposits in large commercial Russian banks.