Several options of money saving and augmentation have appeared in the market lately.

Firstly, it is possible to purchase a life insurance policy of the company. It is a brand new saving method for Kazakhstani people which will allow not only to save and augment money but also to provide the insured with the insurance coverage in case of an illness and accident during the entire saving period.

Secondly, it is possible to start working at the stock market. This method gives the opportunity to command and control the funds. You may influence and make decisions where to invest the money and when to withdraw it. If you decide to invest the money in securities but you concerned about it because you are not thoroughly familiar with this market, then mutual funds will be an ideal instrument for you.

So, what is the mutual fund?

The mutual fund is the pool of the funds which natural persons and legal entities transfer in trust to the management company in order to get profit. It is also possible to say that the mutual fund is an opportunity for an individual to derive benefits from investments in securities as major institutional investors such as banks, companies and funds do. The investor gives his/her money in management when purchasing investment units issued and sold (placed) by the management company of the mutual fund.

The unit is a registered uncertificated issuable security certifying its owner’s share in the mutual fund and the right to receive the money from sale of assets of the mutual fund in case of its disestablishment.

Investments in mutual funds are long-term. In Kazakhstan specialists recommend to invest for one year, at least. Otherwise, the profit will not be high. Investments in western analogs are made for tens of years.

What to expect and what not to expect from mutual funds?

It is possible to expect higher profitability from the mutual fund than from a bank deposit. But this profitability is not guaranteed. You should not expect guaranteed profits and miraculous augmentation of the funds invested which will exceed significantly the existing returns at the stock market. Pursuant to the laws interests and dividends on investment units are not accrued and not paid. You receive profit when your sell your units.

Advantages of Mutual Funds

If your have 1000 US Dollars for investments, it will be difficult for you to raise revenues in the foreign exchange market or in the real estate market. In case of independent investments, the stock market requires much more funds. Mutual funds do not require large initial capital. The main advantage which you receive is that when you purchase units, you will transfer your money in management of the professional who knows much about the securities market.

When you purchase units, you remove the burden of money management from yourself. Now it is not you but the management company will decide in what and when to invest your money. You can do your own business and be sure that your money is in the hands of professionals and is invested with the purpose of earning the maximum profit for you.

The operating principle of mutual funds is that today it is one of the most efficient and available methods of risk reduction for private investors. Protection of investor’s rights is typical of mutual funds and it is ensured by the business structure of mutual funds because the functions of management, storage and registration of investors’ rights and fund assets, control over legitimacy of the money use are separated among such independent companies as the management company, custodian bank, registrar which activities are licensed and thoroughly controlled by the state. The activities of mutual funds and serving structures are strictly regulated by legal acts and controlled by the Financial Supervision Agency.

Unlike the banks which are closed structures and invest deposited funds in any assets, projects and loans without reporting to depositors about it, mutual funds are open structures and they make investments in strict compliance with the rules registered with the Agency for Financial Supervision and known to the client.

Besides, mutual funds report annually on the price of units and net assets to unitholders and controlling authorities. They regularly disclose the reports on the results of investment activities and on the assets structure.

How to purchase units of mutual funds?

The following is necessary for the purchase of units:

— A natural person should have the ID and tax identification number (TIN).

— A legal entity should have the unit purchase order and application for opening of the bank account.

Orders to purchase units of a mutual fund are accepted and executed by the management company or its representatives. The process of the unit purchase is as follows:

Completed documents, a copy of the ID and TIN are provided to the company employees or its representatives, and then you pay the cost of the purchased units. The registrar opens the account in your name.

When the custodian bank confirms the receipt of the money, the management company orders the registrar to transfer the units subject to availability of the completed order on the purchase of investment units.

From then you are the holder of investment units of the mutual fund. You can get more detailed information at: www.investfunds.kz