Investment funds are a collective investment instrument made up of a large number of investors, known as "unit holders", who contribute capital to the fund through "units".

Investment funds are created by a fund manager, which identifies opportunities according to the guidelines and strategies of its predefined investment policy (expected return and potential risk). Regardless of the investment policy, all funds, without exception, diversify their investment across different types of assets to reduce the risk.

Diversification is an important point to keep in mind. Investors can use the same fund to distribute their money across different markets and assets to avoid concentrating the risk in just a handful of instruments. The more diversified the fund, the less risk and volatility it will have, and the easier it will be to offset any losses from one type of asset with the gains from another type.

Investment funds are made up of assets (securities and cash) divided into units. Investors make contributions and delegate their investment decisions to professional managers, always with the aim of obtaining the maximum possible return based on the risk they are willing to assume.

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Investment funds are made up of a group of people who decide to invest together to obtain better conditions and higher returns. Without having great financial knowledge, they allow the unit holders to access investment opportunities that would otherwise be more complicated to access, such as stocks or bonds.

The main aim of an investment fund is to meet the profitability expectations for its unit holders, always in line with the investment policy previously defined in the fund and with the investor profile with which it identifies: Conservative, dynamic or aggressive.

This main objective is achieved by:

• Granting investors access to the securities market, even if they have no knowledge of it.
• Diversifying the risk of investors participating in the fund.
• Offering investors the possibility of acting collectively, thus generating greater advantages and opportunities.

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What taxes do I have to pay on investment funds? What are the benefits of investment funds in my income tax return? Do you pay tax on the profits or returns of investment funds? ... These questions often arise when we are not familiar with investment funds.

One of the main features of investment funds is that they are exempt from taxation until they are redeemed. In other words, they are taxed when you decide to withdraw the money invested or the returns. This is included in the tax base for savings for personal income tax purposes and is declared as capital gains or losses.

The returns generated by investment funds are not taxed if we reinvest them in other funds. We only pay tax when the returns come into our possession. There is no taxation as long as the capital is invested.

Transfers between funds provide significant tax benefits. Transfers between funds are exempt from taxation. This means you can move your money from one fund to another without having to pay tax, regardless of any profits or losses. Remember that investment funds are subject to market fluctuations and other risks related to investing in securities.

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