A popular form of investment
Saving in mutual funds – also known as unit-linked saving – has been on the increase among Finns in recent years. There are over 400 registered mutual funds in Finland, and their combined assets total approximately €61 billion.
Finnish investors also have access to nearly 500 mutual funds registered in other countries. If unit-linked insurance is also taken into account, households own more than 37 percent of the total fund capital.
A mutual fund is maintained by a fund management company, which collects money from private persons and organisations and invests it in several different securities. These securities form the fund.
The fund management company does not own the mutual fund – its owners are the individuals, organisations and foundations who have invested in the fund. One mutual fund is divided into equal units which give equal rights to the fund's assets.
There are differences in the investment policies and investment risk levels of individual mutual funds. These are more specifically defined in the fund prospectus of each fund, and in the fund’s rules, which must be confirmed by the Financial Supervisory Authority.
Mutual funds offer many benefits, the most important of which is risk diversification. Another important benefit is the good liquidity of mutual funds investments: fund units can be quickly turned into cash. Mutual funds present the possibility to invest in outlets that are unfamiliar to private investors and small businesses, and even in outlets that would not normally be available to them.
The rate of return on a mutual fund comes from the development of the investment market, which means that anything that happens in the market is reflected on the value of mutual funds. Product development is active, and as a result, new kinds of funds with different features and risks pop up in the market all the time.
Fund management is regulated by the Act on Common Funds, and overseen by the Financial Supervisory Authority.