An investment fund pools the money of many investors. As an investor, you own part of such a pool corresponding to the amount you have invested. When investing in an investment fund, you become an investor, and you receive investment certificates. Each subfund of an investment fund specialises in a particular investment area in which your money will be invested, for instance Danish bonds or European equities. The returns, costs and losses of a subfund will be distributed between you and the other investors.
What is the difference between an investment fund and a subfund?
An investment fund is a collection of investment subfunds. Investment funds administer the subfunds they have opened. Investment funds ensure that their subfunds are managed professionally for optimum performance. Also, as a holder of investment certificates, you obtain high risk diversification. An investment fund will often have a distribution agreement with one or more banks that may advise you on your investments.
When investing through an investment fund, you can tailor your investment according to your specific needs and wishes. You can invest pension as well as non-pension savings, and the investment amount is up to you. Most people buy and sell their investment certificates through banks. You can always sell your investment certificates at the prices quoted on a daily basis and buy new ones or have the proceeds paid into your account.
Each subfund has a defined investment profile specifying investment targets, past performance and charges payable. This information is available from the Key Investor Information Document (KIID), which is the informative labelling of the subfund.