A Collective Investment Organisation is an institution, with or without legal personality, whose purpose is the collective investment of capital obtained from the public and whose operation is subject to the risk spreading principle and pursuit of the exclusive interests of unitholders.
The following are examples of Collective Investment Organisations in Portugal: Real Estate Investment Funds, Pension Funds and Venture Capital Funds.

An Investment Fund is a Collective investment vehicle that pools savings from individuals or corporations and invests these in property or securities. In the Real Estate Investment Fund case, funds are essentially invested in real estate.
Real estate investment funds can carry on the following activities:
- Acquisition of real estate for resale, renting and other forms of business operations located within European Union Member States.
- Real Estate construction projects with the purpose of subsequently carrying on one of the previous activities.
Renting and resale of real estate enable a periodical return to be achieved not only through capital value growth, but also through rent collection. The development of real estate construction projects require that capital be locked up for a certain period. Consequently, the investment return (corresponding, as a rule, to the real estate capital gain) will materialise in the medium or long-term.
This financial product is an alternative to the investment of investors’ savings, namely, in bank deposits and direct investment in capital markets or in real estate. This product has the advantage of being monitored and managed by Real Estate Investment Fund Management Companies, which are entities specialised in these matters.

Investment funds are an alternative to direct investment in the assets of their portfolio because:
- Assets are managed by professionals who know the markets where these assets are traded;
- Investment risk can be lowered by diversifying their portfolio;
- Transaction costs (namely, brokerage costs) can be reduced as compared to those an investor would have to bear for each operation by virtue of the fact that investment funds deal with large amounts of assets and benefit from tax exemptions in the case of real estate investment;
- They are characterised by their investment simplicity and by the reimbursement of the amounts invested;
- In the case of real estate funds, small investors are allowed access to markets that would have been inaccessible to them, bearing in mind the enormous amount of investment required.

Real Estate Investment Funds are especially differentiated by the variability of capital and by the form of remuneration, namely:

As regards the variability of capital
Open Ended Funds – comprise a variable number of Participation Units, that is, the number of Participation Units varies according to market demand. A subscription leads to an increase in Participation Units and a redemption results in the elimination of the corresponding Participation Units.
Closed Ended Funds – comprise a fixed number of Participation Units, which are established at the time of issue, although these may possibly be increased under pre-established conditions outlined in the management regulations. Investment in or divestment from a closed ended fund is achieved by buying or selling Participation Units.
Mixed Funds – Comprise two categories of Participation Units, one being fixed and the other of a variable number.

As regards the Form of Remuneration
Income (Distribution) Funds – Income generated is distributed to unitholders periodically.
Capitalization Funds – Automatically reinvest the income generated by the respective portfolios by not distributing income and capitalising the value added achieved.

The decision to invest in Investment Funds should consider their diversification. In fact, Investment Funds vary according to various aspects, namely, the typology of funds and form of distribution. Besides these issues, the following aspects should also be considered: Liquidity, Risk and Return.

Liquidity – This is the ease with which participation units of Investment Funds can be converted into cash placed at the investor’s disposal. The liquidity of the Fund can be assessed by the refund notice period established in the management regulation.
Liquidity in closed-end funds is only obtained after the liquidation of the Fund stipulated in the management regulation. Nevertheless, unitholders can demand the liquidation of the Fund as long as their participation units are not listed on the stock exchange for a period of twelve months as of the Fund’s incorporation.

Risk – Risk is associated with yield volatility arising from a specific financial application in Investment Funds. Accordingly, the following must be considered:
1) The nature of the financial assets in the portfolio;
2) The markets where these assets are traded.

Yield – Unlike other financial applications, investment funds do not guarantee rates of return. Accordingly, published yields should be looked upon as a mere indication and only a reflection of past behaviour. Nevertheless, other elements should be considered. These are stipulated in the management regulation, which must be read before participation units of a Fund are subscribed.

Investments are also affected by fees, namely, the amounts debited during the process of commercialisation and management of the fund, which remunerate the activities of the management, depository and marketing entities. These fees are usually divided into the following:

Subscription Fee – this fee may or may not be charged. In the affirmative case, it is charged during the act of subscribing for new participation units and it is calculated based on a predetermined percentage, which is deductible from their net asset value.

Redemption Fee – As in the previous fee, this fee may or may not be charged. When charged, it is debited against the net asset value of the participation units on the settlement date of the respective reimbursement (or redemption) and is calculated based on a predetermined percentage.

Management Fee – This fee is paid periodically by the Fund to the management company and it is intended to cover its expenses and to remunerate its management services. It may consist of a fixed component (calculated based on a pre-determined percentage over the NAV of the Fund) and a variable component (arising from the appreciation of the Fund’s assets).

Deposit Fee – Periodically paid by the fund, this fee is intended to remunerate the depositary’s services. It is calculated based on a predetermined percentage on the net asset value of the Fund.

The subscription is made by filling in a Subscription Form addressed to the management entity, which is available at the counters of placement entities (Banks or other legally authorized agents), and addressed to the management company.
The debit is subsequently charged against the demand deposit account indicated by the subscriber. An entry will be made for each subscription operation, indicating the net asset value for each unit subscribed, the total units acquired and their value at the time.
All the units are identical and give a unitholder the right of ownership over part of the assets of the fund corresponding to the value of the participation units held. The value of each participation unit is obtained by dividing the net asset value of the fund by the number of participation units in circulation.
Participating units are redeemed by filling in a Redemption Form addressed to the management entity, which is provided by placement entities. The money is credited into the demand deposit account indicated during subscription.
The unitholder will be informed of the units he/she still holds if redemption of all the units is not requested.
Redemption or subscription operations are carried out based on the net asset value of each participation unit calculated by the management company for that day.
Information: The actual Law stipulates that an array of informative data shall be provided to Unitholders, such as, for example, information prospectus (either simplified or comprehensive), periodic management reports, publication of the composition of portfolios and subscription as well as redemption prices.

You can consult Imonegócios quotation at the Banco BIC site – http://www.bancobic.pt by following the menu link Produtos e Serviços -» Particulares -» Investimento -» Fundos de Investimento -» Fundo Imonegócios.