Wafa Gestion helps you better understand asset management so that you can make the best decisions regarding your savings.
What is a UCITS fund/a mutual fund?
Undertakings for Collective Investment in Transferable Securities (UCITS) are collective investment vehicles. They centralize the capital of several investors and invest it collectively on the financial markets in several securities (equities, bonds, etc.), with the aim of sharing the profit and diluting the inherent risks and costs between the investors.
This investment method offers several advantages compared to investing directly in securities :
Diversification of securities in the portfolio to increase the sources of potential return, while reducing the risk of capital loss.
Cost optimization thanks to the economies of scale
and privileged access to the expertise of investment professionals.
Diversification
Tax optimization
Professional management
Automatic reinvestment
Title
Mutual funds classification
UCITS are classified according to several criteria, including their management approach (active, passive, quantitative, etc.), asset class and legal form.
Asset class
Mutual funds are divided into five distinct categories that meet different investment objectives, horizons, and risk sensitivities :
Money Market funds : mainly composed of monetary instruments. Horizon: very short term.
Fixed Income funds: mainly composed of debt securities issued by public and/or private entities. Horizon: short, medium or long term.
Equity funds : made of shares of listed companies (portions of their capital traded on the stock exchange). Horizon: long term.
Contractual funds : related contractually to a concrete result at the end of the investment period, expressed in terms of performance and/or guaranteed amount invested. Horizon: long term
Balanced funds : composed of equity and debt securities and must not belong to any of the above-mentioned categories. Horizon: medium to long term
Legal form
Mutual Funds exist in two distinct legal forms: SICAVs (Sociétés d'investissement à capital variable) and FCPs (Fonds communs de placement):
By subscribing to a SICAV, the investor becomes a shareholder of the company and has a right to vote at general meetings for any decision relating to the management of the fund.
By subscribing to an FCP, the investor becomes a unit holder (partner) of a co-ownership of securities that has no legal personality. Management is carried out by a FCP management institution acting on behalf of the holders.
So what does that term mean?
For further information, Wafa Gestion also provides a glossary of the technical terms and concepts most frequently used in asset management to help you better understand the subject.
More educational content
Check out our videos and educational content to learn about these terms in a simplified, animated format.
Title
Your experts
Wafa Gestion gathers a team of committed investment advisors and client managers, experts in mutual fund and wealth management, at your service.
