Over the past few decades, there has been a noticeable trend in the increasing turnover of collective investment globally. This concept refers to the process of pooling capital from multiple investors into a single fund managed by a dedicated management team. This structured approach is essential for executing profitable investments across a diverse array of financial market assets and other properties. Various financial institutions that aggregate the funds of small investors and act as their representatives are categorized as collective investors.
There are three primary types of financial intermediaries present in the market:
Deposit intermediaries, which include commercial banks, credit organizations, and savings and loan associations. Their main task is to safeguard the entrusted funds to meet current consumer needs;
Saving contract companies, such as life and property insurance organizations and various funds. These savings are typically long-term and intended for unforeseen circumstances or future needs;
Investment companies, predominantly represented by funds—be they investment, mutual, unit, or trust funds.
The primary focus of such funds is to manage capital with the aim of preserving and increasing its value.
All these types of financial intermediaries qualify as collective investors; however, investment companies play a central role in conducting investment activities, followed closely by non-government pension funds and insurance firms.
Investor deposits are characterized as long-term savings, aimed at capital preservation. For instance, in Western markets, it is common for individuals to invest their funds in investment funds for an extended or indefinite period. Subsequently, investors typically reclaim their funds as they approach retirement age.
In contrast, the average investment horizon for typical investors in our countries is approximately eight months.
