Mutual funds are popular with investors of different profiles and can be a person’s first step into the world of investments. A fund is a collective investment modality, that is, several people come together to invest in a basket of investments that are normally managed by professional managers.
These managers choose which investment will be part of that basket (the fund) and which will be left out, depending on the characteristics and objectives defined for that fund. For example: a fund may have the majority of its composition in shares (equity fund), in real estate (real estate funds), in fixed income investments (fixed income fund) and so on.
It is these characteristics, performance and balance of the assets that are within that fund that define its yield. Check below how the yield of an investment fund works and understand why it can yield more or less depending on the moment, and why the yield should be looked at more in the long term than in the short term.
How does the return of an investment fund work?
The return of a fund mainly depends on the investments it carries. In addition, some funds usually have performance targets – that is, they choose some indicator as a reference and try to overcome it over time. For example: there are funds with the aim of outperforming the Ibovespa, others aiming to outperform the CDI and so on.
But, in general, there is no fixed return for investment funds. That is, no matter what assets this fund has, it is not possible to pinpoint how much it will yield.
It’s just that most investments are subject to market fluctuations, especially those of variable income, such as stocks, ETFs, BDRs, etc. Even fixed income funds do not have a certain return, because these investments may be linked to market indicators – such as the CDI and the basic interest rate, the Selic – and may have some other assets in their composition that vary according to the market.
In addition, several fixed income investments are private securities, from companies, as is the case with debentures, for example. And everything related to companies cannot be fixed. This happens because companies are subject to everything that happens in the market, such as the internal and external economy, public indicators, changes in their sector of activity, to mention just a few examples.
In other words: even though they are options for diversifying investments, investment funds, as well as most investments, do not have guaranteed results, especially in the short term. However, even though they may suffer fluctuations in the short term, they can outperform market indicators over time, such as the CDI and the Ibovespa, for example.
Therefore, funds can form part of a long-term investment strategy.
So are swings in funds common? Yes
As you have seen, funds are subject to financial market movements. In other words, their yield can fluctuate for different reasons, including the domestic market and the performance of specific companies.
The advantage of an investment fund is precisely the diversification of assets (investments) that are within it. When an asset falls, there may be others that seek to hold that fall. Even so, it is not possible to guarantee a certain profitability.
Below, see how the yield of the main types of investment fund works.
Fixed income fund yield
Fixed income funds must invest at least 80% of their resources in fixed income assets. The other 20% can be invested in other assets.
But even with 80% of the basket in fixed income, the return on this type of fund is not guaranteed. As you have seen, even fixed income varies according to the moment in the market. And if the fund’s fixed-income securities are from companies, this oscillation can be even greater.
Income from real estate fund or FII
Real estate funds, which are also called FIIs, work similarly to conventional investment funds.
The fund manager acts as a kind of trustee, as he also makes decisions regarding the money paid by all the shareholders of this large “financial condominium”.
Only there are differences. According to the investment policy of FIIs, the manager invests in real estate developments or investments related to the sector. And just like any sector of the economy, real estate experiences fluctuations, which directly impact the income of these funds.
Income from private credit funds
Private credit funds invest in private fixed income assets. They are CRIs and CRAs, CDBs and debentures, for example. In this type of fund, the manager seeks a performance above the CDI. In general, they are suitable for conservative or moderate investors.
Even though these bonds are fixed income, as they are from companies, they can fluctuate and impact yield. In this case, everything that happens to a company that is part of the fund can impact its earnings.
Yield from an exchange fund
Exchange funds are generally used by investors who have recurring expenses or foreign currency debt. They are used for the purpose of protecting assets from the devaluation of the Real.
Mandatorily, this type of fund must concentrate at least 80% of its equity in investments linked to foreign currencies. Therefore, the profitability of these funds, in general, follows the variation of the currency chosen to be part of this basket.
The main assets of this fund are foreign currencies, such as the dollar and the euro.
Equity Fund Yield
Equity funds, as the name implies, are funds with the purpose of investing primarily in the stock market. Therefore, they form one of the most aggressive classes both in terms of risk and potential for gain.
The rule says that they must invest at least 67%, or two thirds, in securities of companies listed on the Stock Exchange. The rest can be invested in other types of investments, such as fixed income.
The returns on these funds vary as much as stock exchange papers and are, therefore, another risky type of fund.
Multimarket fund yield
This is a fund that does not invest solely in one market – its assets can be both stocks and fixed income, for example. A multimarket fund works as a wild card in an investor’s portfolio. And on a day-to-day basis, it can bridge the gap between the fixed-income and variable-income markets.
Unlike other classes of funds, multimarket funds are versatile, as they give the manager good freedom to acquire different types of assets. Thus, the manager can take advantage of opportunities in the market with the appreciation or devaluation of interest, currencies and variable income.
They are different from other funds, as they do not have maximum or minimum limits on their composition. In other words, the manager can use whatever asset he wants, in whatever quantity he wants, to achieve the fund’s objectives. That is why, in this case, the yield is even more unpredictable.
Read too
What are investment funds?
Real estate funds: what are they and how to invest?
Passive income in investments: where to invest to live on income?
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