When an investor wants to become a participant in an investment fund, he must acquire fund units. Both the number of fund units and their value change daily depending on the evolution of the number of fund participants and the value of the fund’s assets.
The number of investors in the fund is constantly changing depending on the sales and purchases of fund units that take place daily. When an investor decides to place money in the fund, the number of units issued by the fund increases to reflect new inflows of money into the fund. Basically, the fund issues new fund units in order to be able to sell them to interested investors to purchase them.
Owning a fund unit entitles the investor to a share of the fund’s profit or loss. When an investor wants to sell his owned units, the fund will redeem them, and he will benefit from their value, less the fees and commissions charged by the fund.
The amounts attracted by the fund are invested on the financial markets, and the purchased financial assets are kept by the depositary. The value of a fund unit is given by the value of the total assets divided by the number of fund units in circulation. This gives the value at which an investor can purchase a fund unit.
In order to purchase fund units, an investor must contact an authorized distributor, a brokerage company, a bank or even the fund administrator. If you have found out and are determined about the fund you want to become a participant in, you can do so online, directly on the fund’s website.
It should be noted that both when buying and selling fund units, the price of a fund unit will be known the day after the transaction is initiated. This is because funds invest in various financial instruments, including stocks, and have to wait for financial markets to close in order to make calculations based on closing values.