Investment funds in technology companies

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Bankinter takes a further step in its innovative trend in joint venture vehicles for clients with the creation of a leading fund in the Spanish market: «MVB Fund» It is a fund that was created in order to invest in disruptive companies in the Silicon Valley ecosystem, the cradle of technological innovation. A sector in which a wide range of investment funds is being established in order to improve their profitability, even when, on the contrary, it implies a greater risk in the exposure of savings.

The target final es ofrecer una alternativa de inversión diferencial a los clientes de Banca Privada en un nicho de mercado en el que pueden acceder pocos inversores, como son las empresas de tecnología con gran potencial que están en camino de convertirse en 'Uber', 'Facebook', 'Netflix' or 'Amazon' of the near future. This type of company, which was born as Opening and then they become unicorns — companies valued at more than a billion dollars — they are, first, hard to spot early and, second, hard to dispose of.

At the same time as the latter, the possibilities of participating in the shareholding of this category of companies have decreased in recent years as they take longer and longer to go public. To introduce this type of company into the technology sector, Bankinter has created the "MBV Fund", a fund of funds, in other words, a fund that will invest in venture capital funds (venture capital) which, in turn, are present in the shareholders of these companies with high growth potential.

Invest in technology companies

To invest in the best funds in the world of risk capital who hold positions in future unicorns, the bank has partnered with the renowned entrepreneur in the technological field Martin Varsavsky, a pioneer in several business initiatives in the Spanish market and in other countries, like the United States or Canada. It is a proposal that has already been taken up by other international investment funds and that are marketed by different foreign managers.

The technology sector is one of the most special that there is at the moment in the equity markets. It is very cyclical and in fact you can earn a lot of money for its special characteristics, since its potential for revaluation is broader than in other more conventional or traditional segments. But for the same reason, many euros can be left on the road because volatility is always present in their prices, even when in this case it is investment funds. With a very wide difference between its maximum and minimum prices.

Funds with higher fees

Another of the common denominators of investment funds in technology companies is that in general they have more expansive commissions than in other funds. To the extent that they can approximate up to 2% on the amount of the invested capital. Por tanto, conviene valorar si estos fondos de inversión deben contratarse con este incremento en los gastos de administración y mantenimiento. Todo dependerá del perfil que presente en este momento como pequeño o mediano inversor. Debido a que puede que no be el producto más adecuado para sus intereses personales.

While on the other hand, it must also be appreciated that this type of special investment funds are focused on longer periods of permanence, in the medium and long term. What are the periods where your final profitability can best materialize, even when with the sale you can transfer them at any time and situation. Without this procedure costing you a single euro since it is absolutely free from the beginning. The average interest they have been offering in the last five years. round levels around 5% or 6%. Above the interest caused by the main national and international stock indices.

Business possibilities

In any case, hiring it is a true business possibility as long as its evolution is satisfactory for the interests of investors. Beyond other considerations of a technical nature and perhaps also from the point of view of its fundamental principles. Because in effect, investment funds in technology companies have a very high revaluation potential and that you can get closer to the 45% In most cases. But also with the obvious risk of depreciation, especially in the shorter terms. Thus, you must take special care when hiring.

While, on the other hand, it cannot be forgotten that investment funds in technology companies perform better in expansive economic periods. While you're in a recession, you have a lot more trouble appreciating in the stock markets. That is why the problem of subscribing it at this moment in which it seems that it is going to land an economic crisis of special intensity in the next few months. With which, the risks can be greater to make the savings profitable efficiently.

What are these tech funds like?

This class of financial instruments is characterized above all by the need for a less knowledge of the operations made that derive from the investment in a market index without exchange rate risk, in other words, whose currency is the euro. As well as because they are little consolidated companies in the business landscape. They focus more than on continuous growth, on expectations and if this is not achieved it can be reflected in their prices and this can be seen in your income statement.

While on the other hand, it should be emphasized that the minimum investment to enter these funds depends on the characteristics of each one of them, but at this time there are products that can be subscribed. from only 100 euros. Even though for the investment to produce the desired effects in terms of the perceived profitability, it is necessary to deposit around 3,000 euros at a minimum. The more demanding your monetary contributions, the higher the profitability of investment funds in technology companies.

Helps diversify investment

One of the greatest attractions of these investment funds, in terms of their contracting, is that they enable their subscribers to have their capital invested in a "basket" of securities listed in the European benchmark index, without having to risk a single euro in a market bet that aims at a single value, thus drastically eliminating risks, since in general these packages of actions come from different sectors and countries with which the negative tendencies that one or any of them could manifest are generally neutralized.

It also means being in positions of purchase of companies with high financial solvency that will be the ones that best behave at the time when the European economy in short is emerging from the economic crisis that has taken so much over its equities in recent years. However, it will be the investor in the last resort who chooses the composition of these portfolios that the managers have prepared previously, either through defensive proposals without excessive risk, or by others that imply a greater commitment for its subscribers, but that in return also offers greater opportunities for its revaluation in the coming months in the event that European equities return to an upward path.

Tips to get hired

Investment funds in technology companies generally maintain constants common to all these financial instruments. Among those that stand out below we expose you:

• These funds are based on companies with a higher specific weight of European and American equities and in some cases it will be a little problem for you to subscribe them through the purchase and sale of shares on the stock market.
• These are products that base their profitability on the expectations they are creating in the equity markets. For this reason they are very volatile and in any case they bring more risks in the operations that are carried out.
• They are not intended for a very well defined small and medium investor profile, as in the case of defensive or conservative retailers where security prevails over other main considerations.
• It should be a portfolio of technology sector securities that can be combined with other financial assets with the primary purpose of preserving capital in the most adverse times for equity markets.
• They are not the investment funds with which you were used to operating until now and therefore you will have to print another class of investment strategies.
• Whatever the case, investment funds in technology companies belong to a segment of the sector that is possibly less known by average investors.
• And in short, you shouldn't happily subscribe to them because they may create more of a hindrance for you from now on. In the form of a reduction of the capital contributed to this financial instrument.