What are investment funds?

Investment funds in Portugal are a popular and affordable way to invest money with professional management and diversification. Here's a quick overview:

What are investment funds?
These are financial products that bring together the capital of several investors.

This capital is managed by specialists who invest in stocks, bonds, real estate or other assets.

Each investor holds "participation units" proportional to the amount invested.

🧭 Types of investment funds
Equity funds They invest mainly in company stocks. They have greater potential for profitability, but also greater risk.

Bond funds Invest in debt securities (such as government bonds or companies). They are more stable than stocks, but with moderate returns.

Mixed funds Combine stocks and bonds. They offer a balance between risk and profitability.

Treasury (monetary) funds Invest in short-term, low-risk assets, such as treasury bills. Ideal for short-term goals.

Real estate funds Invest in real estate (offices, shopping centres, etc.). They can generate income through leasing or appreciation.

Funds of funds They invest in other investment funds. They allow for additional diversification, but may have higher commissions.

ETFs (Exchange Traded Funds) Exchange-traded funds that replicate indices. They have low commissions and high liquidity.

Guaranteed funds Guarantee the capital invested at the end of the term, which may include additional profitability.

PPR (Retirement Savings) Funds Focused on retirement savings, with tax benefits.

✅ Advantages
Diversification: Reduces risk by investing in multiple assets.
Professional management: experts make strategic decisions.
Affordability: You can start with relatively low values.
Transparency: regular reporting and clear rules.
Investment funds offer many advantages, but they also involve risks that are important to know before investing. Here's a clear and straightforward summary:

⚠️ Main risks of investment funds
Market risk: The value of assets can fall due to economic factors, political factors, or unexpected events.

Credit risk: If the fund invests in bonds and the issuer does not pay, there are losses.

Liquidity risk: It can be difficult to sell assets quickly without losing value, especially in less-traded funds.

Currency risk: If the fund has assets in foreign currencies, currency fluctuations can affect the yield.

Management risk: Managers' decisions may not be correct, affecting performance.

Concentration risk: Funds that are very focused on one sector or region are more vulnerable to specific fluctuations.