Mutual funds are the most popular types of investment in Israel and around the world.
Investing in the capital markets through them allows both exposure and diversification of the investment.
It is a financial instrument for joint investment in securities that is managed by the fund manager, and in Israel is supervised by the Securities Authority.
Through the fund, investors can join other investors, and together they let a professional investment manager invest for them.
The investment is made in accordance with a pre-defined investment policy, and the management fees for this investment are the same for all unit owners in the fund.
The purchase and sale of the units can be done through the members of the stock exchange and the banks.
In Israel, there are currently about 2,200 mutual funds of various types managed by dozens of entities.
The total value of the investment in them is estimated at about NIS 400 billion.
As mentioned, one of the advantages of investing in funds is the diversification of investments.
This is an element that is supposed to reduce the risk in relation to investing in one security.
Beyond that, the investment is also possible in small amounts and is supervised by the Securities Authority.
The funds are divided into types according to the nature and style of investment.
There are those who are active, that is, they try to choose for investment the securities that in the manager's opinion will yield a better return than the others, and there are passive ones who make an investment that follows certain stock market indexes, without the discretion of the fund manager.
The funds can also be divided according to additional characteristics - for example, in which financial instruments they invest - corporate bonds, government bonds, shares, options, what is the profit distribution policy, and if it is an open fund or a closed fund that offers a limited number of units.
Another characteristic: the fund's tax classification - liable, tax-paying, or exempt, then there is a difference in the tax applicable to the unit holders in the fund as a result.
In the recent period, characterized by an increase in interest rates and great volatility in both the stock and bond markets, investment opportunities have arisen in the various channels, the implementation of which through appropriate mutual funds can certainly be considered a good solution. This, of course, considering the abilities and needs of each investor, and the assistance of professionals who can to give advice and assistance.
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