The unit holder may pledge its units in an investment fund as a guarantee against a loan from a financial institution.
In addition to units in an investment fund, this real property security can consist of money, shares, insurance, treasury bills or promissory notes.
A pledge is similar to the property guarantee that is provided in mortgages. The main difference between the two guarantees is that, in the case of a pledge, the free disposal of the pledged assets is prevented during the period in which the main obligation is in force.
What are the advantages of a pledge?
A pledge is a very common security in the financial sector. Its main benefits are:
It is possible to dispose of the returns generated by the pledged asset. This occurs in many cases, although it is not always possible. In the case of long-term deposits or share dividends, the free disposal of interest is allowed. In other cases, such as investment funds, pledges are made by unit and redemption is not therefore allowed.
The pledge is a high-quality guarantee if the assets have a good classification to allow access to more advantageous financial conditions.
The financing percentage will be variable depending on the asset we finance. It will depend on whether the securities are from an equity account, a term account or fixed income securities. The financing percentage will be higher when the fluctuations in value are lower.
Financing through pledging offers endless possibilities.