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Friday, July 21, 2017 
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Fund units

Fund units represent a holding of the net assets of an investment fund (mutual fund). Investment funds are Collective Investment Undertaking (UCITS) that invest in the stock market and/or in the money market. Funds from a large number of investors are gathered and invested in order to generate profits.

Investment funds are managed by asset management companies (AM) that develop and apply the investment strategy. Thus, investors delegate the investment management to professional administrators.

Depending on the investment policy, a fund may invest in any type of financial instrument available – shares, bonds, bank deposits, derivatives, currencies, promissory notes, etc. It can also use various combinations of the above-mentioned financial instruments or invest in real estate such as commercial or office buildings, land and other assets.

Depending on the combination of assets in which it invests, which determines the risk profile and the potential gains, funds are classified as follows:

  • equity funds, investing mainly in equities
  • bond funds, investing mainly in bonds
  • monetary funds, investing mainly in treasury instruments and bank deposits
  • mixed funds, with balanced investment in several assets classes.

Funds that are traded on the stock exchange are similar to shares, but the risk associated with fund units is lower because of the diversification. Investing in more shares and diversifying through the use of multiple asset classes reduces the risks associated with these instruments.

Exchange Traded Funds (ETF)

ETFs or Exchange Traded Funds are a particular type of fund units. Most ETFs track the structure of an indexes, equity or bond indexes. ETFs are suitable for investors who want their investment to match market trends.

ETFs are a useful tool for those who want to invest on the stock market but who do not have enough knowledge to build their own portfolio or simply do not have time to analyze and manage the components of the index replicated by the fund.

EFTs can be used by investors who wish to quickly gain exposure to the shares included in the index but do not have enough capital to build such a diversified portfolio. Instead, with a relatively small amount, investing in an ETF can replicate the performance that would actually require a significantly larger allocation of capital for the purchase of each of the components included in the tracked index.

ETFs are traded similarly to shares, meaning that an investor can buy and sell ETFs throughout the trading session, at the market value, by using services of an authorized intermediary.

The first ETF listed on the Bucharest Stock Exchange (BVB), ETF BET Tradeville, is an investment fund that tracks the evolution of BET index comprising the 10 most liquid companies listed at BVB.

Guide for investments in ETFs

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Choose an intermediary

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Contact BVB

General information

bvb@bvb.ro

Information about BVB shares

ir@bvb.ro