Investment trust (mutual fund)

Pursuant to Section 1 of the German Investment Act (InvG) of 2003, a public investment fund managed by a capital management company. An investment fund collects capital by issuing fund units and invests it in assets. – An investment company that acquires funds by selling shares to investors, and then invests the money in a diversified portfolio of assets; this is also referred to as lot-size transformation, and – makes its deposits available to others as a source of refinancing, i.e. engages in maturity transformation. – Statistically, mutual funds do not include money market funds, which invest in low-risk assets on a short-term basis. – Investment funds have a weighty financing function in their function as providers of capital to banks, companies and public-sector entities. Rapid changes in the funds’ investment policies can therefore have a direct impact on funding conditions and increase maturity change risk. – See order fund, issue price, bogey, exchange traded funds, fund, ethical, fund, open, guarantee fund, capital management company, capital stock, profit center, mutual fund, pension fund, redemption barrier, special fund, tax-saving fund, accumulation fund, consumer complaints. – See the annex “Euro area statistics,” section “Monetary developments, banks and investment funds,” subheading “Assets of investment funds in the euro area by investment focus and investor group” in the respective ECB Monthly Bulletin, as well as the Deutsche Bundesbank’s monthly statistical supplement “Capital market statistics” on sales and purchases of mutual fund shares in Germany; ECB Monthly Bulletin of September 2008, pp. 36 f. (loss in value of mutual funds in the wake of the subprime crisis; overviews), BaFin Annual Report 2008, pp. 48 (new regulations for cross-border launch of funds), pp. 193 f. (trend reports to BaFin during the financial crisis; complaints), BaFin Annual Report 2009, p. 67 (guideline for non-EU-compliant investment funds), pp. 217 f. (daily trend reports to BaFin; increase in complaints; survey on fund managers’ remuneration practices), BaFin Annual Report 2010, pp. 235 f. (very large differences in earnings performance; high number of consumer complaints), and the respective BaFin Annual Report, chapter “Supervision of securities trading and investment business. ECB Monthly Bulletin of January 2010, p. 18 ff. (new statistics on investment funds in the euro area; overviews), ECB Monthly Bulletin of August 2010, p. 109 ff. (in-depth discussion on investment funds in the euro area; many overviews; statistical classifications), ECB Monthly Bulletin of January 2012, p. 66 (definition of “investment fund”), ECB Monthly Bulletin of April 2012, p. 18 ff.), Financial Stability Report 2012, p, 68 f. (investment funds are part of a credit intermediation chain, they thus belong to the shadow banking system, and they can multiply their market potential by using derivatives; overview), Monthly Report of the Deutsche Bundesbank of January 2013, p. 13 ff. (detailed market study; many overviews; references), Monthly Report of the Deutsche Bundesbank of March 2014, p. 18 (investment funds as part of the shadow banking system).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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