Fonds

Fonds is a term borrowed from French used to describe investment pools. It denotes a pool of capital collected from many investors and managed by professional fund managers to achieve a specified objective. Investors own units or shares representing a portion of the fund's assets, and returns accrue in proportion to their stake. The fund's assets are typically diversified across securities and other instruments to balance risk and return.

Fund types include open-end funds such as mutual funds and exchange-traded funds (ETFs), as well as closed-end funds. Other varieties include hedge funds, private equity funds, pension funds, and sovereign wealth funds. Funds can target different asset classes (equities, fixed income, real assets, money markets) and investment styles (passive index tracking or active management).

A fund's organization includes a sponsor or management company, a supervisory or board structure, a custodian bank that holds assets, and an administrator that handles operations. Fees commonly include a management fee and, in some funds, a performance or incentive fee, plus operating costs expressed as an expense ratio. NAV, calculated daily or at regular intervals, determines the price at which units are bought or sold.

Regulation varies by jurisdiction. In the European Union, UCITS and AIFMD frameworks govern many funds; in the United States, the Investment Company Act and SEC oversight apply. Investors should consider liquidity, tax treatment, minimum investments, and potential conflicts of interest when evaluating funds. The global fund industry emphasizes diversification and professional management, but fund performance is not guaranteed.