El Salvador’s Superintendency of the Financial System approves a new open-end investment fund
The Board of Directors of the Superintendency of the Financial System approved a new open-end investment fund. With the approval of this type of financial instrument, mechanisms for participation in the financial market are made available to the public.
First, we must understand what mutual funds are. Investment funds are a collective investment scheme. That is to say, it is a financial instrument through which many investors join together, each contributing their money so that the sum of their participation is managed by an Investment Fund Manager. The Fund Manager is supervised by the Superintendence of the Financial System, regulated by the Central Reserve Bank, and is dedicated to managing investment funds, that is, to invest the participation quotas of investors in the capital markets.
The advantage of investment funds is that they are an opportunity whose investment does not have to be so high, which allows many people to participate in a mechanism where other investors make their contribution of money. The participants in the investment fund have co-ownership rights and will have as much ownership rights as they have in the fund.
The recently approved investment fund is open-ended, which means that according to Article 3 of the Investment Funds Law, it does not have a defined term, thus allowing investors to enter or withdraw at any time. The attraction of this new financial instrument is that it will allow both local and foreign investors to place funds in securities issued locally and abroad with only USD 100.00 as minimum opening amount.
This new investment fund represents a great opportunity for small investors to participate in the financial market and for the Investment Fund Manager to manage this money in diversified financial instruments for a return on investment.