How to invest in Investment Funds to reach your targets

Investment funds are savings instruments framed within what are called collective investment undertakings (CIUs). This term refers to how an investment fund groups the savings of many investors so that the management entity can invest the total amount in different assets, such as stocks, bonds, currencies, or even in other investment funds, always within the limits tolerated by the policy of the investment fund and with the objective of maximizing profitability for participants.

1. Security

The assets invested in these products are deposited off the balance sheet of the distributing entity. Custody and depositing is performed by a third party—the depositary—independent of the management entity. As a result, the investor is protected from the hypothetical bankruptcy of the bank or financial institution. Investment funds are a safe savings instrument. In the case of international investment funds distributed by BBVA, they are supervised by the Comission de Surveillance du Secteur Financier (CSSF) and by the Portuguese Securities Market Commission (CMVM).

2. They allow for investment in all types of assets and markets

Investing in funds generates what is called “economies of scale”. By grouping the savings of many participants, it becomes possible to invest in assets and markets that would be out of reach to individuals.

3. Liquidity

One of the biggest advantages of investment funds is the high liquidity they offer, i.e., the ease and speed of converting the investment into cash.

4. Professional management

Through investment funds, the participant delegates the most difficult part of the investment to professionals: making daily decisions. They seek to maximize profitability by investing in markets and assets provided for in the fund's prospectus and in accordance with the Fund's risk policy.

We have a wide range of investment funds that meet the needs of all types of participants, regardless of their profitability expectations and risk tolerance:

• Bond Funds: characterized by the absence of exposure to equities. These funds have a conservative profile.
• Equity Funds: their minimum exposure to equities is 75%. These funds have a dynamic risk profile.
• Global Funds: the policy of these funds does not fit into any of those described above.
• Multi-asset Funds: these are the most suitable option for first-time investors, as they only need to choose the fund that best matches their risk profile (conservative, moderate, dynamic), and the fund will be managed in accordance with the participant's risk tolerance. The fund will move within a minimum and maximum range of exposure to the stock market in line with the risk profile and always trying to maximize the risk-adjusted return.

1. Set an investment goal

This is a fundamental step becausethe investment objective and the term will determine which asset or assets are suitable for channeling your investment. If you have a short period of time to achieve your goal, you'll need a more conservative profile. If, for example, you invest in the medium/long or long term, you can adopt a moderate or dynamic profile with a higher potential for profitability, always keeping in mind that you will be assuming a certain level of risk.

2. Diversify

Diversification is security. You can diversify in two ways:

• by investing in multiple funds (fund portfolio) or in a multi-asset fund that invests in many assets, instead of a single fund. This way you will have better protection in the face of unforeseen market events, as the investment will be more diversified. It is easy to achieve, because investment funds generally do not require a minimum investment amount, and it is very affordable.
  
• Periodic subscriptions. Don't invest everything at once. Distribute the investment periodically throughout the year. You can program automatic, periodic subscriptions, for example, by making a monthly subscription. This way, you will minimize the risk of buying at a market peak, or buying expensive.
  

3. Monitor regularly

You should analyze the evolution of your investment funds on a regular basis in order to assess whether they are meeting their expectations and whether they are behaving according to the market where the investment was made. You can do this analysis monthly or quarterly, and it can be based on the regular information provided by the management entities, where in addition to the recent profitability, you can find comments from managers.

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Investment Funds do not guarantee returns, and past results are no guarantee of future results.

This information does not exclude or exempt you from consulting the legal documentation to be provided before subscribing an Investment Fund, namely, the KIID, the Prospectus, the Specific Marketing Conditions and the Supplementary information document. Offering this information does not imply the provision of a tax advisory service or personalized investment advice, since no recommendation is made and your personal circumstances are not taken into account.