What is an investment fund?

Investment funds play an essential role in the financial world. They enable investors to pool their capital and invest it in a wide range of assets, from equities and bonds to alternative investments such as real estate and private equity.

By pooling resources, investors benefit from professional management and gain access to opportunities generally beyond individual reach. These funds are suitable for both institutional and individual investors, with specific solutions for each category.

It is essential to understand that any investment involves risks, including the possibility of losing part or all of the capital invested, depending on market fluctuations and the performance of the underlying assets.

Read more: Mutual funds

There are many different types of investment fund, each with its own specific characteristics to meet different financial objectives and risk levels. Here is an overview of the main categories of investment funds available.

Equity investment funds

These funds focus primarily on the acquisition of shares in listed or unlisted companies. They aim for long-term capital growth, with moderate to high risk. By investing in equities, these funds enable you to benefit from company performance, but may also be subject to market volatility.

Bond funds

These funds invest in bonds issued by governments or companies. They offer a stable source of income thanks to the interest generated, but with a yield that is often lower than that of equity funds.

Private equity funds

Private equity funds enable investors to participate in unlisted companies, generally in the development or growth phase. Private equity funds, such as those offered by Eurazeo Wealth Solutions, target a variety of sectors such as technology, healthcare or real estate, enabling greater portfolio diversification.

Mixed funds

These funds combine several asset classes, such as equities and bonds, to balance return and risk. Some funds favor a fixed allocation, while others adopt a dynamic approach to respond to market variations.

Investment funds enable individuals and institutions to pool their resources and invest in a variety of assets. They provide access to professional management and diversification, while meeting a variety of investment objectives.

Raising capital

Investment funds raise capital from a variety of investors, including individuals, companies and financial institutions. The money raised is then pooled into a portfolio managed by a professional asset management company. This company is responsible for allocating resources according to a defined strategy, while ensuring that investors' return and risk management objectives are met.

Asset management and allocation

The management of investment funds is based on a predefined investment strategy, which determines how capital will be allocated to different financial instruments. For example, some funds focus on specific sectors such as technology, healthcare or real estate, while others concentrate on particular geographical areas. Depending on the type of fund, management can be active, with regular buy and sell decisions, or passive, following a market index.

Players such as Eurazeo Wealth Solutions offer management solutions tailored to investor profiles. These companies draw on in-depth expertise and innovative management tools to identify and seize the best investment opportunities.

Returns and liquidity

Investment fund returns can vary considerably depending on strategy. Some funds, such as bond funds, generate regular income, often in the form of coupons or dividends, offering investors a stable source of income. Other funds, such as equity funds, may aim for long-term growth with more volatile returns.

Funds specializing in private equity generally have more limited liquidity and a longer-term investment horizon. These funds often require a capital commitment over several years before investors can withdraw their funds.

Regulation and transparency

Investment funds are subject to strict regulations that vary from country to country. These rules aim to protect investors by imposing transparency standards, notably on portfolio composition, management fees and performance. Investors receive regular reports on the fund's management, enabling them to track the progress of their investment.

Investors need to understand how each type of fund works before making a commitment, taking into account their financial objectives, risk tolerance and liquidity needs.

Investing in an investment fund offers several key advantages for optimizing capital management.

Diversification

Investing in a fund allows you to diversify your portfolio without having to analyze each asset individually. This reduces the risks associated with a single exposure.

Access to exclusive opportunities

Funds offer access to markets that are sometimes inaccessible to individual investors, such as private equity and infrastructure. Eurazeo Wealth Solutions funds facilitate access to these opportunities, enabling private investors to diversify their portfolios and benefit from sectors with high growth potential.

Professional management

The funds are managed by financial experts who implement tailored investment strategies to maximize returns while controlling risks. This professional expertise is a real advantage for investors wishing to delegate the management of their portfolio.

Choosing an investment fund requires careful consideration and evaluation of the various criteria in relation to your profile and financial objectives.

Defining your financial objectives

Before investing in a fund, it's essential to clearly define your financial objectives: are you looking to build up long-term savings, generate additional regular income, or diversify your portfolio? This step will enable you to choose the type of fund best suited to your needs, according to your financial priorities and investment horizon.

Understanding risks

Each investment fund presents a different level of risk, depending on its strategy and asset type. It's important to understand the risks involved, so that you can align your choices with your risk tolerance.

Study historical performance

Analyzing past performance helps to understand how the fund has performed under different economic conditions. While this does not prejudge future results, it does offer insights into the fund's management and resilience to market fluctuations.

Check associated fees

Management, entry and exit fees can vary considerably from one fund to another. It is essential to examine them carefully to ensure that they correspond to the quality of the services offered and the fund's expected performance.

Investment funds are an effective way of diversifying your portfolio and accessing growth opportunities under expert management. However, it is important to fully understand how these funds work, to assess the risks associated with each type of fund, and to choose the one that best matches your financial objectives.