What is an investment company?

Investment companies are public limited companies specialized in the administration of investments, which pool the capital of numerous savers to invest in the purchase of securities and documents selected by specialists.

In other words, when you invest your capital in a company of this type, what you do is acquire shares of the capital stock of the Investment Company, like this Your capital together with that of other investors is used to obtain different instruments from the stock market, which will make up your portfolio of investment.

The advantages of investment companies are:

• You can distribute your resources in investments of different terms within the same account, according to your needs (immediate, weekly, monthly or other).
• An adequate diversification of your investment portfolio in investments.
• Access to investment opportunities with high returns.
• Absolute ease to invest and withdraw your resources.
• Daily update of the value of your investment, including returns.

Investment portfolios can be made up of the following titles or securities:

• Actions.
• Bonds.
• Promissory notes.
• Fixed deadlines.
• Commercial paper.
• Others.

That is why investment companies have their own characteristics of liquidity, term, risk and return, depending on the type of instruments in which you have invested your capital.

What characteristics does an Investment Company have?
Investment companies must be subject to criteria established by the country's financial authorities, such as:

• Diversification and reduction of risks. They are invested in various instruments and securities, to avoid the probability of loss of investing in a single document.
• Security and liquidity. By reducing the risk, the security of your investment increases. Liquidity increases in investment companies by having the possibility of obtaining secured credits.
• Attractive profitability. Which is achieved through a professional capital management, subject to investment rules imposed by the National Banking and Securities Commission, such as:
• You cannot invest more than 10% in shares of the same company
• Nor can 30% be invested in securities with a maturity of more than one year, from the date on which the shares are acquired.
• Not even 40% of investments can be made in securities and documents endorsed by credit institutions.

Investment companies make a relationship between risk and return in the acquisition of securities and documents, to place them in the shares of the capital of the same company among the investors that make up.

Investment Companies strengthen the health of the national economy, for different reasons:

• They decentralize the stock market to hundreds or thousands of savers.
• They provide this market to small and medium investors.
• They democratize capital, because it is invested in a variety of stocks on the stock market.
• They contribute to the financing of the country's production plant, since the actions in which it is invested are mostly private initiative companies.

In addition to the Financial Institutions and Brokerage Houses, in Mexico there are mutual fund operators, companies that are are especially dedicated to providing this type of financial services, which require a lower initial investment with better yields.

What types of Investment Companies exist?
There are different types of investment companies that differ depending on the type of titles or securities that operate:
a) Debt. They are Investment Companies that operate fixed income instruments or debt instruments, which generate daily interest, which is why this type of company offers you daily returns without representing risks in your capital. The instruments that this type of company operates are the following:

• Bonds.
• Cetes.
• Commercial paper.
• Government role.
• Promissory notes of the Federation Treasury.
• Bank Deposit Certificates.
• Others.

These securities offer returns based on the interest granted by the debt instruments of your investment portfolio, with advantages such as:

• Low initial investment.
• Risk is always controlled.
• They are available or liquid daily.

It is highly recommended that you verify the investment scale of the set of instruments that will make up your investment portfolio, so that you are aware of the risk of the operation.

b) Commons: In this type of company, the capital of savers, including yours, is invested in securities known as variable income, that is, in securities listed on the Mexican Stock Exchange (BMV).

The laws of the stock market oblige Common Investment Companies to abide by the following rules:

• A commission is charged for the purchase-sale of securities, which will vary according to a percentage established by each company.
• The purchase-sale operation will be settled in 48 business hours, since the price of shares of this type is evaluated at the close of the markets.

c) Capital: They are better known as Venture Capital Investment Companies or SINCAS. They are those that operate with securities and documents issued by companies that require long-term resources, whose activities, according to the National Banking and Securities Commission (CNBV), are preferably related to the objectives of the National Planning of the Developing.

The administration of this type of company falls to a shareholders' meeting, from which a Board of Directors is derived. For this reason, this type of society is directed exclusively for legal persons.

How do Investment Companies operate?
Investment Companies are managed by Operating Companies, which are in charge of distribute, buy and evaluate the titles or securities that make up the investment portfolio offered to investors.

They also value your investment portfolio daily and publish the price of the shares of the Investment Company the next day. As an investor, you will receive in exchange shares of the investment company for your invested capital.

The Operating Companies are, in themselves, the administrators of the Investment Companies, the responsible for the distribution and repurchase of the titles or securities that make up the companies of this type. These companies can be:

• Institutions or independent operators.
• Brokerage houses.
• Multiple Banking Institutions.

The price of each share depends on the profits or losses obtained daily from the securities that make up the investment portfolio, either by obtaining of the interest earned or the difference in the market price of the securities that make up the instruments owned by the company from which you acquired shares.

Other functions of an operator are:
• They represent you, the other investors and the Investment Company itself in all acts of administration and management.
• They guard the assets that comprise it.
• They collect dividends, rents and amortizations of the instruments.
• They decide the purchases and sales of assets.

The operator executes the operating instructions of an Investment Committee, made up of invited persons or shareholders of the investment company, who decide in which instruments the money from the investment fund should be invested. investment.

They generally meet once a week to assess the risk, the quality of the securities and the investment policy to be followed, depending on the market situation.

How is profit determined in an Investment Company?
The profitability of investment companies is derived directly from the performance or profit provided by the securities, securities or financial instruments in which your resources and other savers are invested, performance that is determined by the difference between the purchase and sale prices of these Actions.

By placing your capital in an Investment Company you are acquiring shares of it, resources that, along with that of others investors, are used to acquire a basket of securities market instruments in order to generate interest and diversify risks.

Each investment company has its own characteristics of liquidity, term, risk and return depending on the percentages and mix of instruments in which your capital is invested.

The choice of a type of investment company will depend on your liquidity needs as well as your profile as an investor.

How safe is it to invest in an Investment Company?
The investments that you can make through an investment company that operate debt instruments are safe, such as investments that you could make in a banking institution, since they diversify the capital invested in different instruments or securities, so that the risk does not fall on just one, also because these instruments are mostly government and banking.

But if you want to know how safe your capital can be in a particular investment company, the best thing you can do is analyze in detail the instruments that handle each one, as well as carry out a study of the variations that society has presented in its yields.

The risk ratings given to investment company operators by securities rating agencies can serve as a parameter to know how safe your investment can be.

How can I find out how much my investment is worth?
So that you know how much your investment is worth, just multiply the number of shares or titles of the company investment that you have acquired, for the price of the securities you can consult them daily, here, in Dineronet.com.

Likewise, investment companies must provide you with information on your investments in a detailed and updated statement of account, at the end of each month.

The price of the securities of the investment company changes daily, due to the change in value of the instruments that They were acquired with the capital of your investment and that of other savers, instruments that make up your investment portfolio. For this reason, the return that an investment company can provide you, in a given period, is difficult to calculate.

A way to make an approximate calculation of the return that an investment company can provide you, in a period determined, is as follows: Calculate the difference in the price of the investment company title at the beginning and end of period.

Why should I invest in an Investment Company?
There are many reasons to invest in an investment company:

• Initial investment capital accessible to clients.
• Diversity of investment instruments such as debt, equity or mixed markets, to which an independent investor may not have access.
• Diversified risk in different titles or securities, which are analyzed by an investment committee.
• The funds generate a good return relative to the amount of the investors.
• They adapt to the investor's needs, such as:
• Liquidity.
• Term.
• Amount.
• Risk.

The company operator is in charge of the fiscal management of the operations carried out.

Investment Companies are constantly monitored by the financial authorities.
Investment companies offer you the following advantages:

• Automatic capitalization of returns.
• Ease of making inquiries and movements by phone.
• Diversification of resources according to liquidity, performance and risk needs.
• Reduction of operating costs due to the fact that the companies handle large volumes of operations.
• Net earnings for national and foreign individuals.

Investment companies offer high returns and competitive services compared to traditional investment banking alternatives.

What to do to invest in an Investment Company?
If you are interested in investing your capital in such a company, we suggest you carry out the following analysis:

• Identify your investment needs, as well as the objectives you are looking for when placing these resources, as well as the term and amount of money you require to achieve your objectives.
• Analyze the Investment Company most appropriate to your needs, taking into account your personal preferences as an investor.
• Calculate the amount of money you require to invest today, as well as the amount you will need to save to achieve your investment goals.
• Go to the operator of investment companies, banking institution or brokerage house, to deposit your capital in the securities of the Investment Company that you indicate to the promoter.
• Review your investment portfolio periodically, and you should also repeat the aforementioned steps because investment plans change over time.

For any modification that you want to make in your investment portfolio, you must contact your promoter to sell the titles in which you no longer wish to participate, and acquire those in which you are interested.

And to make a withdrawal of resources, also contact your investment promoter to make a sale of your securities of the Investment Company that you indicate, who will later give you a check or, better still, will deposit in your checking account the cash.

What type of Investment Company is worth investing in?
Before participating in an Investment Company, analyze personal investment expectations, which you can determine by answering the following questions:

Do you need immediate liquidity?

Liquidity is the ability that you have as an investor to have your capital available at any time, without having to wait for a certain term.

If this is your requirement, the best thing for you is to enter an Investment Company that offers immediate liquidity, where you can withdraw from your investment contract the capital you need with a deposit to a checking account or with a check payable of yours.

Do you want to invest in the short, medium or long term?
If you want to invest in the short term, which provides you with daily interest, then choose shares of a Debt Investment Company, which provide you with fixed-term returns.

If you prefer to invest in a medium, place part of your capital in a Common Investment Company for individuals, and another part in a Debt Investment Company, so that you can have capital in the event that another investment opportunity arises.

On the other hand, if you make a long-term investment, you must invest all your capital in a Common Investment Company, where your capital will be used to acquire variable income securities or shares that are listed on the Mexican Stock Exchange (BMV), where you will have to wait a certain time to reap the fruits of your investment.

Do you consider yourself a conservative investor or do you like to take risks?
If you consider yourself conservative in your way of investing, you should place your capital in debt instruments offered by Investment Companies.

On the other hand, if you know how to accept risks, you should direct your capital to the Common Investment Companies, in which you will be able to appreciate the results of your investment in the medium to long term and, in the worst case, you may lose your invested capital.

Capital Investment Companies or SINCAS are very specialized, since they are closed investments aimed at legal entities, therefore not just any investor can participate in them. They are very similar to Venture Capital Companies, very fashionable today in the so-called new economy, which invest their capital in recent companies whose business plans are viable and promising. Therefore, more than 4 years must pass to see the results of the investment in this type of company.

Alert: The Law indicates that investment companies can only operate with securities and documents registered in the National Registry of Securities and Intermediaries, except those that the CNBV disapproves or that imply conflict of interest

What risks do I have as an investor?
An Investment Company, by law, cannot assure you of a return in a certain period because:
Your portfolio is not fixed,
The price of the fund's assets changes daily.

This causes the value of the fund's shares to vary daily. These changes are what generate returns to the investment fund and returns to investors.

Therefore, all existing investments in the stock market carry a risk, but this can be measured depending on the instrument in which you invest.

Currently there is a diversity of funds on the market that vary in terms of amount, term, risk and other factors, which provide the opportunity to choose the type of investment company to invest.

Alert: Before investing in an investment company, find out about the background and current situation of the fund operator or Who owns the company, as it is important to know if the institution has enough capital to support your investments such as client.

What information should my Investment Company give me?
By law, Investment Company operators must provide information to their investors, as follows:

• Policy for the sale of its shares and maximum limit for holding one share of the company.
• Form of liquidation of purchase and sale of its shares.
• Detailed investment, liquidity, selection and diversification policies for assets, as well as the maximum and minimum investment limits per instrument.
• Information on the risks that may arise from the company's portfolio.
• The valuation system of its shares and the periodicity with which said valuation is carried out.
• The repurchase limits that may exist.
• The obligation to buy back the shares of an investor, in what circumstances and in what term.
• General and relevant data of the form of operation of the Investment Company.

In addition, when investing in an investment company you should be clear about the following:

• No investor may own 10% or more of the shares of an Investment Company.
• The purchase of shares in an Investment Company must be in cash.
• There is the possibility of repurchase by the Investment Company. This means that you can sell your shareholding to the company, according to what is indicated in its prospectus.
• There is a valuation system for the Company's shares.
• Investment Companies must operate exclusively with securities and documents registered in the National Registry of Securities and Intermediaries.
• The securities and documents that are part of the portfolio of securities of the Investment Company must be deposited in Institutions for the Deposit of Securities.

Alert: With investment companies there is always a possibility that your investment runs the risk of being lost. However, the risk can be reduced with proper management of your investment portfolio.