Investment funds are one of the most popular and effective ways for individuals to access the financial market. They allow investors to pool their money together and invest in particular assets. Various types of alternative investment funds are available in the market that cater to different investment objectives and risk profiles.
One of the most common types is the mutual fund. Mutual funds pool money from a group of investors to invest in stocks, bonds, and other similar assets. These funds are further classified into equity funds, debt funds, hybrid funds, and thematic funds based on their investment objective and asset allocation.
Exchange-traded funds have gained immense popularity in recent years. This type is similar to mutual funds but is available on stock exchanges. They offer investors to own diversified asset portfolios at a low cost. They are available for many asset classes and sectors, including equities, fixed income, commodities, and currencies.
Closed-ended funds issue a certain number of shares via an initial public offering (IPO). Once the IPO is finished, the shares become available on stock exchanges. Closed-ended funds have a fixed maturity period and can trade at a premium or discount to their net asset value (NAV). Investors can buy or sell closed-ended fund shares on the stock exchange.
Investment funds are popular among investors as they offer a diversified portfolio of securities with professional asset management by Thales Capital. One of the main benefits of investing in these funds is the diversification of investment across different securities, sectors, and locations. This helps decrease the risk of the investment portfolio. What’s more, investment funds offer easy access to investment opportunities that may not be available to individual investors. Moreover, these funds offer varying levels of liquidity that provide flexibility for investors who may need to access their investments quickly. Additionally, investment funds are as cost-effective as micro finance because the fees charged for managing the fund are spread across all investors.
However, there are also some cons of investing in investment funds that investors should know. One of the main shortcomings is the lack of control over the investment decisions made by the portfolio management team. Investors have limited say in the securities or assets that are included in the fund’s portfolio which may not align with their investment objectives or risk tolerance. Furthermore, the fees charged for managing the fund can be relatively high, impacting the overall return on investment.
Remember that these funds can be subject to market volatility and may experience fluctuations in value. Investors should also consider the tax implications of investing in such assets.
Fund performance depends on the market conditions and the fund manager’s strategy. Investors should consider the performance of the investment fund, whether it is a master feeder fund or any other similar asset, over a longer period to judge its performance accurately.
The primary investment risk is market risk which arises due to the volatility of the financial markets. The value of the investment fund can increase or decrease based on market conditions. Another risk is credit risk which is the possibility of borrowers defaulting on their loans. This risk is more significant for bond funds that invest in corporate bonds. Liquidity risk is another risk that investors should consider, which refers to the difficulty in selling an investment when there is no buyer in the market.
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Thales Capital worked with us from day one of our renewables investment fund, structured it and became part of our Board. We gave them full confidence in the manner the vehicle was elaborated and the service providers were selected.
We have successfully structured an investment fund with Thales Capital and strongly appreciated their commitment and assistance in our journey.
Thales Capital is an advisory company with the highest professional standards. Their service offering fully captures the quality Luxembourg market has on offer.
Luxembourg is one of the founders of the European Union.
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The second market in the world by assets under management.
Thales Capital Luxembourg is a licensed, independent advisor specialized in private capital management, fund structuring, governance, investments and capital raising.
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