Mutual funds are composed of various types of assets, the management of which is the responsibility of the fund manager. Since, the assets are chosen according to the characteristics of the funds.

Investing in mutual funds is a good alternative for people who want to diversify their portfolio. After all, buying just a few shares, you already expose yourself to a gigantic range of assets.

On the other hand, as a disadvantage we can highlight the fact that the funds have a management and performance fee. In short, the administration fee serves to pay the people who work in the fund, and the performance fee is charged only when the fund reaches the benchmark.

What are mutual funds?
Mutual funds are funds composed of the resources of several people. These resources are managed by a professional manager in order to achieve the best possible performance. These funds can apply in different asset classes, the most popular are equity funds, fixed income and multimarket.

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These three types can be subdivided into other types of funds. For example, a stock fund can be focused on small caps or dividends. On the other hand, a fixed income fund may apply to post-fixed or prefixed securities. Finally, the multi-market fund can be divided between investments in Brazil or abroad.

How do mutual funds work?
Mutual funds function as a meeting of investors, whose assets will be allocated by a professional manager. The three types of existing mutual funds work as follows:

1- Fixed income funds: At least 80% of the fund's portfolio should be allocated to fixed income securities. Thus, the manager can apply in securities such as Agribusiness Letter of Credit (LCA), Real Estate Letter of Credit (LCI), Bill of Exchange (LC), direct treasury and Bank Deposit Certificate (CDB).

2- Stock funds: As its name implies, this type of fund is focused on applying in actions. Thus, at least 51% of the fund's equity should be invested in shares of companies listed on the stock exchange.

However, these funds cannot have more than a third of the portfolio applied to shares of the same company. Additionally, they cannot use derivative transactions except as a hedge transaction.

3- Multi-market funds: This type of fund is the most versatile, since the manager applies to several types of assets at the same time. Therefore, these funds can apply simultaneously in stocks, government bonds, debentures, private securities, foreign exchange, ETFs and small caps.

Advantages and disadvantages
Like all types of investments, mutual funds have advantages and disadvantages that must be weighed by investors before choosing this type of application. Check out what are the advantages and disadvantages:

Advantages
One of the main advantages of mutual funds is the diversification of the investment portfolio. This is because, through some quotas, you already becomes part of a fund with a portfolio composed of several assets. Remembering that diversification is important, as it reduces risks and enhances returns.

Since this diversification does not require the application of a very high value, just buy a few quotas. Therefore, this is an advantage especially for investors who are gradually starting to invest in the stock exchange.

Another advantage is practicality, since the person responsible for choosing the assets and applying the fund's assets is the manager. Of course, you should keep an eye on fund performance and assets that are entering or exiting the portfolio. However, this follow-up is much easier than managing an investment portfolio on your own.

Disadvantages
At the same time that the fact that the manager is responsible for the fund's portfolio is advantageous, because it brings practicality, it is also disadvantageous, because it limits the investor. This is because, as the manager is solely responsible for the portfolio, the investor cannot participate in any decision regarding the investments.

Another disadvantage is that mutual funds have the administration and performance fee. It is through the management fee that the fund can remunerate the people who work in it. The performance rate is present in some types of funds and acts as a bonus for the manager.

In summary, the funds have a return target and when the manager manages to exceed the target, the performance rate is discounted. Although this rate is a way to encourage the manager to get high returns, it also works as an extra cost to investors.

How to invest in mutual funds? Metatron Global Fund Mauritius
To invest in mutual funds it is essential that you know your investor profile. There are funds of different types that apply to assets with varying degrees of risk. For example, if you don't like to take risks, a fixed income fund might be more interesting than a stock fund.

In addition, it is worth analyzing what your goal with the investment and choosing the fund that fits the most in it. Finally, you should also analyze the historical performance of the fund, the performance of the manager, the value of the fees, the benchmark and the value of the quotas.

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