What are investment funds?

Investment funds are financial instruments that allow investors to pool their money in funds designated for collective investment, with joint contributions from many investors. Each investor is a partner in the fund’s portfolio by obtaining a share that represents part of the fund’s portfolio, and then the amount in the fund is managed by a professional manager in his field.

The fund's capital is also invested in many capital market instruments, or one of them. These investment tools may include working in one of the business sectors in which the investment fund is licensed to operate, whether in the field of stocks, bonds, real estate, commodities, money, or precious metals.

How do investment funds work?

First, the investment fund is established by a licensed investment fund management company (such as Oragon Company), and the company in turn manages the investment fund by determining the fund’s objectives, policies, assets, fees, investment plans, and objectives.

Investment funds usually work based on dividing the units of a single fund. The net price of a fund unit is determined by the value of the fund’s assets divided by the number of fund units. The fund’s units are then offered for sale to the public through public or private subscription.

After collecting money from investors, the fund-managing company begins investing it in specific assets that are compatible with its specialization and objectives. The company monitors the performance of the assets continuously and makes the necessary adjustments to the portfolio to serve its growth, taking into account risk management.

The company then distributes the funds’ profits to investors periodically (annually, semi-annually, or otherwise), and investors can also sell their shares of the company’s investment fund at any time.

Types of investment funds

Investment funds are diverse and their tools differ from one investment fund to another. Each type of fund has its advantages and risks, and those in charge of them are aware of the methods of managing them and achieving the best gains from them.

We mention the most important of these funds:

• Stock funds: These are investment funds that invest their capital in shares of joint-stock companies offered for trading in stock markets. With the growth of stock prices, these funds achieve their growth. However, these funds have the drawback of their high investment risks due to their connection to stock prices that are subject to turmoil and vibration.
• Bond funds: These are funds that invest their money in government bonds or corporate bonds, and these funds achieve their growth from the usurious interest resulting from these bonds.
• Mixed investment funds: There may also be an additional form generated from the previous two funds, which are mixed funds that combine investment in stocks and bonds.
• Commodity funds: They are a type of fund specialized in investing in basic commodities, such as gold, oil, natural gas, and other similar items.
• Real estate funds: A type of fund that is often safe and profitable, as it specializes in investing in built and unbuilt types of real estate, whether residential or commercial.

In addition to many other funds whose financial instruments vary, such as index funds, active investment funds, and alternative investment funds.

What distinguishes mutual funds from other money market instruments?

Investment funds are characterized by several beneficial investment properties, the most important of which are:

1. Investment portfolios are managed by experts in their investment fields, which relieves the investor of the burden of monitoring his capital and the growth of his investments, as portfolio management studies investment risks, chances of success, obstacles, and the method of managing deals.
2. Investment funds allow investors to diversify their investments into various assets, which greatly reduces investment risks and capital loss, in contrast to investing in a single company asset, for example.
3. Ease of investment and smooth dealing with investment funds, without administrative or legal complications.
4. The possibility of liquidating funds and selling shares of fund units at any time, which means providing liquidity from simply owned shares, unlike other types of investments.

What are the risks associated with mutual funds?

Like other types of investments, investment funds are naturally associated with some risks that the fund management usually works to take into account and manage wisely. Perhaps the most famous risks are:

• Decrease in the value of the assets owned by the Fund, because the value of the securities purchased by the Fund may increase or decrease, and if the investment sources in one fund are not diversified, the risk increases.
• Capital loss (in bond funds), is if the government or the borrowing company is unable to repay its debts, and therefore bond funds are considered one of the most dangerous investment funds.

How to choose an investment fund?

Before investing in a mutual fund, it is a good idea to consult an investment advisor who is an expert in his field to determine whether the purpose of the fund you are interested in matches your purpose and to ensure that its risks are mostly safe.

But it is also useful to talk here about some criteria that help you evaluate and study the investment fund:

• Level of risk: The risks of all investment funds are not the same. The more turbulent and volatile the areas of work of the investment fund, the higher the risk. As for investments in more stable assets, they are often safer (real estate funds, for example).

Then, dividing investment funds into several projects increases the chances of safety in investments in general. On the other hand, funds that promise potentially high returns; also mean the possibility of large losses, which means a high risk of capital.

• Past performance: Knowing the past investment fund performance can help us evaluate whether the fund is well managed or not, and the ability of the team managing it to manage capital wisely and expertly.

Although this rule is unstable in itself, there is no guarantee that the return obtained by that financial or investment fund in the past period will be obtained in the coming period; But it can be an indicator of performance.

• Expense Ratio: It is natural for a fund’s expense ratios to harm returns. This does not mean that the fund with a higher expense ratio will achieve a worse financial return. Fund expense ratios may change for various reasons. A fund may create a portfolio once and choose not to trade excessively. To achieve these financial goals, another fund may aim to make a profit from daily price movements by trading frequently. Thus, the second fund will pay more commissions on trading and its spending will increase.

In any case, it is useful to obtain sufficient information about the fund’s expenses and financial fees. To evaluate trading potential and compare with other funds.

General information about the fund and those in charge of it: Before deciding to contribute to one of the investment funds, do not miss knowing the most important information about the founder of the fund the funds that he or she manages, and their success rates, as well as reviewing the professional biography of the portfolio manager who will manage the selected portfolio of the fund, and the team supervising the work and their biography. Professionalism in this field, the latest information and strategies of the fund for its various portfolios, as well as fund management fees, estimated spending ratios, investment conditions, and required documents, and then comparing this fund with other funds to compare them.

Tax considerations related to investment funds

Investment fund management companies are considered companies subject to the tax system, and these companies must submit a tax return for their profits from managing investment portfolios.

Noting that there are tax exemptions covered by the Corporate Tax Law in its fifth article, and under clause (D) of the first paragraph of the aforementioned article, profits resulting from the management of portfolios of securities investment funds or related partnerships established in Turkey are exempt from corporate tax in some cases.

Oragon Company competently establishes and manages investment funds in Türkiye

Emerging from Imtilak Investment Group, owner of the largest real estate marketing company in Turkey and with diversified investments inside and outside Turkey, Oragon Company came to demonstrate its presence and the experience of its work team in the field of investment and investment fund management, with deep experience in the roots of investment within its fertile environments, with a capable workforce of managing investment funds by the established principles and rules of the Turkish labor market.

Our investment funds provide you with rich opportunities for profit and growth, within controls that take into account investment risks and are good at dealing with them, in addition to the legal advantages granted by investment according to Turkish laws, such as the opportunity to apply for Turkish citizenship for interested foreign investors.

To learn in detail about our services, our work team, our expertise, and our achievements in our business fields, we welcome your direct contact or visit our fixed work sites installed on our website.

Edited by Oragon Company ©