Making investment through investment funds offers the investors a number of advantages including professional management of the assets, lower risk in investment making, supervision and transparency, high market liquidity and economizing on the costs.
As defined by Investopedia, “An investment fund is a supply of capital belonging to numerous investors used to collectively purchase securities while each investor retains ownership and control of his own shares. An investment fund provides a broader selection of investment opportunities, greater management expertise and lower investment fees than investors might be able to obtain on their own. Types of investment funds include mutual funds, exchange-traded funds, money market funds and hedge funds.”
Given that liquidity has recently reached its highest level in Iran, while the society is experiencing an increasing trend of inflation, many people are concerned about their money losing the value.
According to the Central Bank of Iran (CBI), Iran’s liquidity stood at 19.979 quadrillion rials (about $475.69 billion) during the third month of the current Iranian calendar year, Khordad (May 22-June 21). The figure shows 25.1 percent growth in comparison with the same period in the preceding year.
And the Statistical Center of Iran has announced that the inflation rate in the twelve-month period ended on August 22, which marks the end of the fifth Iranian calendar month of Mordad, stood at 42.2 percent, indicating a 1.8-percent rise from the figure of the twelve-month period ended on the last day of the previous month and a 41.6-percent rise compared to the same month of the past year.
Under such condition, investment funds with the advantage of low investment risk and high market liquidity lay a proper ground for investment making.
It’s a decade that investment funds have started activity in the Iranian capital market under the supervision of Iran’s Securities and Exchange Organization (SEO).
According to the data released by Financial Information Processing of Iran (FIPIran), a subsidiary of Tehran Securities Exchange Technology Management Company (TSETMC), some 200 investment funds have been active in the country during the past decade and the value of investment made by the real and legal entities through these funds has reached 1.6 quadrillion rials (about $38.095 billion) something that equals 10 percent of liquidity in the country.
While the advantages offered by the investment funds incentivize the investors, capital market is also laying the ground for more activity of these funds in its different markets.
During a press conference held at the place of Iran’s over-the-counter (OTC) exchange market, known as Iran Fara Bourse (IFB), on Saturday on the recent amendments made in the regulations of the IFB base market, Amir Hamooni, the managing director of IFB, said these amendments will make it possible for two more types of investment funds to enter the base market.
To attract more investors to these funds, SEO is also investigating their limitations to remove them.
One limitation is that each investment fund has its own mechanism; so the investors should study separate instructions and regulations for making investment through different funds.
Mohammadreza Motamed, the SEO director for supervising financial institutions, last week announced that mechanisms of the investment funds are to become similar. He said, “We are investigating the regulations to define an integrated instruction for the activity of these funds in a way that the investors will be required to refer to just a single instruction once making investment through different funds”.
- source : Mehrnews