The global financial crisis of 2008 was the most convincing proof that prudential money management is a complex process with many challenges and pitfalls. After all we live in interesting times when the indisputably “safe” deposits can disappear into thin air and “too big to fail” financial mammoths can go bankrupt. Nevertheless, there are still ways for the average investor to be shielded from the anarchy of financial conditions, such as professional management and diversification.
The significance of diversification.
Mutual funds are a popular form of investment in North America and Western Europe. In the US more than 25% of the portfolio of the average household is invested in mutual funds while in European countries, such as Finland, allocation reaches up to 27%.
The main advantage of mutual funds is the diversification of risk. The money of investors gather in large investment pools of capitals and then are scattered to different countries, industries and asset classes. This practically means that in case one country or industry faces serious economic problems in the future the returns of the fund will not be affected significantly since an important proportion of the collected capitals are invested in different countries and industries.
Additional advantages of mutual funds
- High Liquidity
- Attractive Minimum amount of investment
- Huge range of options depending on the capabilities and requirements of investors
- Development of a culture of saving.
- Tax-free returns and redemption values.
- Sophisticated professional management
- Collective investment power
Mutual funds can be used by both individuals and legal entities.
Individuals can use mutual funds as:
Investment funds for non-European Residence countries investment funds have the following additional purposes:
- Method of acquiring Cypriot Citizenship.
- Method for obtaining Permanent Residence for residents of third countries.
Businesses can use mutual funds as pension plans for the administrative staff and the employees.
This is the more attractive package for hard-working, talented individuals that provides an additional incentive for the retention of existing staff. Pension business is considered the company’s output and is tax-exempted.
The AFC has been providing leading investment products in Cyprus for more than 30 years. Our expert consultants have the ability to assess specific needs and constraints of each individual and suggest the investment capital that will help to fulfil financial goals.
In 2009, responding to the challenges of the financial crisis, the AFC created a specialized risk management department which through the most modern methods of fundamental analysis tries to mitigate the exposure of clients from the turmoil of the financial system but also to detect unexpected investment opportunities.
Should you have any queries, don’t hesitate to contact us.