These are the different financial instruments in which it is possible to invest through the funds: stocks, bills, bonds…
The effect that indebtedness has on profitability. In the securities markets, it refers to the fact that with small amounts of money an investment can be made that behaves like an investment of much larger volume.
It is the diversification of investments among different products or markets, in order to improve the return and/or control the risk of the aggregate.
It is an informal definition for those entities that offer and provide investment services without being authorized to do so.
These are dangerous because in most cases the apparent provision of such services is only a cover to appropriate the capital of their victims, making them believe that they are making a highly profitable investment.
The moment they cannot justify the losses, they disappear or change their name. In other words, they are swindlers.
Custody of Securities
Investment service consisting of the maintenance of a securities account. In exchange for a commission, the intermediary providing this service must keep the client’s positions up to date, facilitate the exercise of the rights derived from the holding of the portfolio, etc.
Banks, savings banks or other financial institutions that assume custody of the securities, cash and, in general, of the assets invested in collective investment schemes. Among other functions, they are responsible for overseeing the performance of the management company. The depositaries must be authorized by the CNMV and registered in the corresponding public registry.
Derivatives are financial instruments whose price not only varies according to parameters such as risk or term, but also depends on the market price of another asset, called the underlying. The investor bets on a certain evolution of the underlying asset (upward or downward) in the stock markets.
This is a basic principle of financial market operations, according to which risks can be controlled if the overall amount to be invested is distributed among products with different return and risk expectations. The underlying idea is that, by integrating assets with opposite risks, these can be compensated to different degrees, so that the risk of the aggregate is lower.
Statement of position
Document prepared by the management companies to inform the unitholders or shareholders of their position in the fund or investment company. It must be sent to investors every month, if there have been movements during the period, or annually if there have not been any.
Family groups that develop an integral management of their assets, by themselves or through specialized entities. They may include services such as global financial and tax planning, asset management, investment management, etc.
Collective Investment Scheme Prospectus
Informative document containing the basic characteristics of a CII. This is an official document, the minimum content of which is determined by the regulations: investment policy, type of fund, past performance, target investor profile, commission system, etc. Depending on its content, there are two types: the full prospectus and the simplified prospectus. The latter must be delivered to the investor by the marketing entity free of charge, prior to the subscription of the units or shares. The prospectuses of the CIIs are reviewed by the CNMV and can be consulted in the public registers of this body and on the marketer’s website.
Official document in which the necessary information and data on the issuers and the securities being offered are included in writing, so that potential investors may obtain a true and fair view of the issuer and a well-founded judgment on the proposed investment. The National Securities Market Commission (CNMV) checks that the prospectus refers, in clear and understandable language, to all the aspects established by law, so that relevant facts are not omitted, nor are data offered that could mislead investors. In general, the registration of the prospectus is mandatory for issues and public offers for sale and subscription of securities (OPV/OPS) and public offers for acquisition of shares (OPA), and the issuing or offering entities are obliged to make it available to the public prior to the subscription of the securities. It can also be consulted on the issuer’s website and in the CNMV registry.
Investment Funds are Collective Investment Institutions, whose management and representation corresponds to a management company.
Investment Funds are professionally managed by a manager and are regulated by the Law and Regulations of Collective Investment Institutions, as well as their own management regulations.
In addition, the National Securities Market Commission (Comisión Nacional del Mercado de Valores) has the function of controlling the management of the investment funds and protecting the unit holders from possible bad practices by the managers.
In the Mutual Fund there are different figures:
– The unitholder. This is the saver.
– The manager. It is in charge of managing the fund, that is to say, it invests the money to generate more.
Custodian of the fund. Custodian and oversees the fund’s assets.
– The participant buys shares in the fund and the manager, applying his knowledge, will make his savings grow.
When the unitholder buys (subscription) the fund charges a commission as well as when the unitholder sells (redemption). The manager and the management company in turn also charge a commission for their work.
The number of units of a fund is not fixed, it increases each time new unitholders are added to the fund. The value of each unit is therefore calculated by dividing the fund’s assets by the number of units.
A contract negotiated on an organized market, whereby the parties agree to buy and sell a specific quantity of a security (underlying asset) at a predetermined future date, and at a price agreed in advance.