Treasury Notes and Investment Funds

Treasury Notes
Treasury notes with maturity at 3 or 6 months or a year, are issued at discount,  normally in bimonthly auctions. Treasury notes can be object to double operations that are two buying and selling linked to the opposite sign, one in cash and other one at an agreed term. A doubles operation, also called “with re-buying agreement,”  a buyer of treasury notes is forced to re-buy it to the same person at the agreed term and price. this way investments can be made or obtain financing in very short-terms.

Notes usually offer a higher profit than commercial papers, since –despite not having to practice any retention in the origin-  financial entities have to provide the treasury with the list of holders. In commercial papers, on the other hand, besides not practicing any retention, they do not have to provide the list of their investors, with which they are granted fiscal opacity.

Investment funds
An investment fund is a patrimony without legal features that belongs to a plurality of investors (called participants), and thus it has the condition of collective investment institution. This investment, in case of underlying investment funds, is formed in its majority by stocks, debentures and public funds, since the main activity of a fund is financial investments and management of securities.

It is also possible to invest in real estate investment funds and currency funds.

To invest in a real estate investment fund, one has to buy shares from the negotiating society. As stocks are part of a company?s social capital, shares are part of the funds patrimony. Since funds provided by investors or shareholders are in their majority invested in securities quoted in the stock markets, the value of shares fluctuate everyday.

Underlying investment funds have to comply with a great deal of regulations basically referred to the type of investments, they can carry out to the liquidity they have to keep and to the periodical information that each participant has to provide. Besides, the funds have to be subject of an external audit.

The investor can make his participation in a fund more profitable through:

• benefits that are periodically delivered
• recovering its participation at a liquidation value when the fund is withdrawn

The liquidation value can be known each day, since funds are estimated after quoting session in the market. The liquidation value is estimated starting from the last quote of each of the securities in which one has invested, and to which cash from the safe and banks is added. 

In investment funds there are no extensions of capital. Anyways, investors can buy more shares any time. According to last days participation of liquidation values quoting, the managing society issues and sells new shares, or reimburses and amortizes those in circulation.

There are different types of funds, among which the following can be highlighted.

Fixed income underlying investment funds. These are underlying investment funds that invest in fixed income that can be short or long-term. They can also invest in national or international securities.

Variable income underlying funds are those that essentially invest in variable incomes that could be national or international.

Mixed underlying investment funds are funds that invest in combined form of fixed income and variable incomes.

Money market assets investment funds are those that invest in short-term, that is, money market assets (commercial papers or Treasury notes, for example). They are also called money funds. The main difference between a money market assets investment fund, and underlying investment fund is in the term of the assets they invest in, since the latter do not have any term restrictions, the former has to necessarily invest in short-term assets.

Treasury funds invest in Treasury securities. If they are short-term securities they are called “money market assets Treasury funds, but if they invest in mid or long-term securities these are called “underlying Treasury funds.”

Besides, there are also funds in which the investor has a minimum profit assured (guaranteed funds) and funds in which the investor can change funds without having to pay taxes for it, under the frame of a linked unit.

Other funds that have increased lately are the sectional funds, that invest in companies from certain sectors as in technology funds, which are investments in new technologies.

Many societies participate in the fund. On one side is the managing society, which manages the fund, decides the investment policies and daily estimates of the liquidating value. On the other hand, we have the depositing society, which is the one in charge of the custody of the funds assets.

Beginner Money Investing Underlying Assets Reimbursed Debentures Public Funds Example Types of Bonds Public Funds Debentures Stocks can also be: Stock Example Short-term Financial Assets Company Promissory Notes Credit Entities Commercial Papers Treasury Notes and Investment Funds Underlying Investment Societies Warrants Public & Private Values