Mutual investment

The institute of mutual investment is a corporate or unit investment fund, which conducts the activity, related to investors’ funds accumulation with the purpose of gaining return on the investment in securities, corporate rights and real estate.

Funds, which give the opportunity to the private individuals to unite even insignificant savings and collectively invest them at the equity market, have existed all over the world for many years. The first fund of mutual investment for population was established in August, 1822 by king of Holland William I, and afterwards in 1849 in Switzerland, and in 1952 - in France. The establishment of the first mutual fund in the USA goes back to 1924, and this country is the one, where this way of placing of funds of population became the most widespread. The amount of investment funds in the USA exceeded 8000 long ago. There are still such market players as Vanguard U. S. Growth Fund Investor Shares, founded in 1959, or Dodge & Income Dried (1989).

On the whole there are over 50 000 investment funds opened for international investors all over the world. Basic principles of their activity, regardless the features of legislation of every separate country, are similar throughout the world. All of they accumulate clients’ funds by means of selling the shares or stocks to them, and then placing them at the financial market with the purpose of total assets growth and increase of value of investment of every fund member. Return on such investment is gained after the sale of share with higher value (at a higher price) and sometimes in the form of dividend per share of fund.

For the Ukrainian investor the institute of mutual investment is a new worthy alternative to the usual bank deposits, which protect funds from inflation but are not able to provide considerable profit.

The Ukrainian market of mutual investment is on the initial stage of development and is much smaller than Russian, to say nothing of the European, which has a long-term history of development. However it demonstrates the enormous rates of growth… For example, the quantity of asset management companies increased by almost 1,5 times. The quantitative growth of investment funds, managed by these companies, was still more impressive. If in 2005 75 new funds were established, in 2006 this indicator exceeds 200 funds of different types. The assets of funds, invested in various sectors of the economy of Ukraine reached 17 mlrd. hryvnas in comparison with 6,9 mlrd. in 2005.

According to the analysis of the market the quantity of asset management companies will reach 300-350 and of investment funds will grow from 500 to almost 800. The assets’ growth of these companies will make almost 23 mlrd. hryvnas and reach 40 mlrd. in 2007.

It is impossible to omit the fact, that in the USA the total amount of mutual investment exceed the deposits of population by one and a half times, in France - by 1,18 times, in Poland they make almost 16 % of the deposit amounts, in Russia - about 3%, and in Ukraine this indicator is less than 1 % of total value of deposits. These figures prove the necessity of development of organized equity market, corporate management, increase of level of corporate culture, conduction of wide educational activity among the population of Ukraine, introduction of international rules of activity (GIPS), and also carrying out pension reform in Ukraine as a condition of living standards’ growth and economic growth of the country on the whole.

Information represented by our company for you in the given section is to make each of our current or potential client understand the basic concepts, concerning mutual investment, realize its advantages and all possible risks. If you have any questions, do not hesitate to deal with the professionals of “ITT-Management” or write the e-mail.

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