Funds are capital assets managed by investment companies or mutual fund companies that are invested in stocks, bonds, real estate, commodities, precious metals, etc. There are many types of funds, such as equity funds, bond funds, mixed funds, guarantee funds, hedge funds, etc., which are available to investors for capital investment. Which fund is the most suitable for a particular investor should be well researched. There are funds that promise high profits for risk-loving investors as well as funds that are more ideal for safety-oriented investors and are less profitable, but also less risky.
The various funds all have one thing in common: they invest in several assets. For example, an equity fund holds shares in several companies and a real estate fund holds shares in several real estate companies. Investment funds, or funds for short, are issued by banks or investment companies. The fund prospectus specifies the investment objectives in which the investors' money is invested.
By investing in different sectors or regions, the risk is widely spread (diversified). A fund is subject to the usual price fluctuations, but is always rebalanced to keep the risk as low as possible. A fund usually contains higher-risk and lower-risk shares, which are shifted according to the price. The fund managers' aim is to generate a return above the benchmark (reference index). The investor participates with his capital by acquiring a certain share in the fund.