One of the investment options is funds. It is a collective investment instrument used by many Spaniards to make their savings profitable. Specifically, according to the latest data published by Inverco, Spaniards have 331,892 million euros in investment funds after increasing their assets by 8.4% compared to the end of 2022. If you are a beginner and want to bet on it, this is what you have to know about these products.
Each fund is made up of the contributions of investors, called participants. And each owns a part of the fund’s assets, in proportion to the value of their contributions. Increases or decreases in the value of assets are attributed proportionally to the unitholders.
The fund is created by an entity, the manager, which is the one that jointly invests these contributions in different financial assets (fixed income, equities, derivatives or any combination of these, etc.) following guidelines set in advance in the fund’s prospectus. Specifically, in this prospectus the investor will know the investment policy, type of assets, the level of risk or the associated commissions.
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This simplified brochure is what is known as a DFI or fundamental information document. The CNMV stresses that the first step to invest in investment funds should be to read this document to know the terms, expenses and conditions of subscription or redemption of the shares. Customer must keep a copy
Subscription and redemption commission in investment funds
Once the investment decision has been made in a fund, it is done through the subscription of shares. Each investor receives a number of shares that is the result of dividing the amount invested by the net asset value applicable to the operation. This net asset value changes every day, depending on how the price of the assets that the manager has bought with the investors’ money evolves. The applicable net asset value is that of the same day of the request, which will be published the following day. The subscription can be associated with a commission of up to 5% of the investment.
On the other hand, when the investor wants to recover the money invested, he will request the reimbursement of his shares. And the amount paid will be the net asset value of the shares at the time of the request for reimbursement. The investor will know what the exact result of his investment has been, how much he has won or lost, once he receives the payment of the refund. In case of obtaining capital gains (gain) the percentage for which it is taxed at that time will be withheld.
The refund sometimes has to be subtracted a refund fee. Usually, the maximum term in which the investor must receive his money is 3 days from requesting the refund. Refunds can have a commission of up to 5%; This fee is very common in guaranteed funds. In any case, it should be checked in the DFI document, since, according to the CNMV, it is sometimes possible to save it simply by delaying the refund or requesting it on a specific date.
But it is also possible that the investor wants to change his investment, that is, transfer the money invested from one fund to another. The transfer consists of the reimbursement of one fund and the immediate subscription of another, but for tax purposes the age of the investment is preserved. That is, if the investor obtains a capital gain (gain) it is not taxed for the reimbursement obtained. Taxation is deferred until the final reimbursement occurs, until the money is available.
When making a transfer, the CNMV recalls that, although there is no transfer fee itself, “this operation involves a redemption and subscription of shares, which are subject to the respective subscription and redemption fees established in the prospectus and in the DFI”.
