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Monetary funds have become one of the great unknown by small and medium investors. Perhaps because of their low profitability in recent years and that therefore they do not make them prone to hiring. In a general environment, where investment funds as a whole registered a positive return of 1,58%, with which the profitability in the first half of the year meets 4,83%, which represents the best historical profitability accumulated in a first half for Investment funds.
But where the monetary funds surely have not been the ones that have developed the best performance in this period. Partly due to its excessive link with the price of money, at a time when the interest rate is at 0%, its lowest level in its entire life. As a result of the monetary policy carried out by the authorities of the European Central Bank (ECB) in their desire to boost the economy of the euro zone after the economic crisis of 2008.
It is true that monetary investment funds are stable, but with little profitability and this fact removes attractiveness among small and medium investors. To the point that they are inclined towards other models in their administration, such as investment funds in equities, fixed income or even absolute profitability as a formula to make their savings profitable with greater guarantees of success from now on. But what are monetary mutual funds really like? Well, we are going to give you the essential keys in case from now on you will find it necessary to hire these financial instruments.
Monetary funds, what are they like?
This class of investment funds are constituted in formats whose assets are incorporated by short-term fixed income instruments, at least 12 months. They are fundamentally characterized by their high security and liquidity. As a result, they are distinguished from other funds by having very low returns and volatilities. Right now, your annual interest is barely over 0.50% at best. In other words, practically nothing and that allow investors to opt for other models in their administration. To this end, they are very similar to fixed-term bank deposits, with a very similar line of behavior.
Mientras que, por otra parte, los fondos de inversión monetaria no son la mejor manera de rentabilizar el capital al deseo de los pequeños y medianos inversores. Si no, por el contrario, ayudan a obtener una retribución mínima en el mejor de los casos. No se puede hablar de inversión con estos débiles márgenes de intermediación. Y por tanto estamos hablando de un producto que está destinado a un perfil de inversor muy conservador. De forma general persons mayores que desconocen las noticias que se originan en torno al siempre complicado mundo del dinero.
Lower commissions
On the contrary, and as a most outstanding element is the fact that its commissions are the lowest in the investment fund sector. With rates that rarely exceed the 0.6% level. In other words, lower than in the rest of investment funds, both variable income and fixed income. So that the small expense compensates for the minimum profitability offered by these financial instruments. With an offer, which without being as powerful as in the rest of investment funds, it does cover the demand of its holders.
Otro aspecto que se debe abordar cuando se habla de fondos monetarios es que pueden servir como complemento a otras inversiones. Tanto la renta variable como la renta fija, aún cuando sus mecánicas siguen caminos absolutamente diferentes y conviene analizarlas antes de su viable subscription. Sea cual sea el caso, se puede decir que estos fondos son rentables, sino todo lo contrario. Con una reducción de los contratos realizados por los usuarios, según los últimos datos enviados por la Asociación de Organizaciones de Inversión Colectiva y Fondos de Pensiones (Inverco).
When can they be hired?
The strategy de inversión en esta clase de fondos se lleva a cabo de forma muy puntual y con condiciones que deben respetarse en todo momento. Dicho de otra forma, en un contexto de debilidad de los mercados de renta variable donde los inversores buscan refugio de los flujos monetarios. Donde su seguridad prima sobre otras estrategias de inversión más agresivas. Sabiendo de antemano que habrá muy poco interés que se obtendrá a partir de ahora.
On the other hand, these special investment funds are practically stagnant. Without moving in one direction or another so that there is no news in investment. In practice, this means that no money will be made or lost from this investment. An aspect that may be sufficient in times of great downturns in financial markets since money is protected from the umbrella of these financial assets. Beyond another series of considerations of a technical nature or also from the point of view of its fundamental principles. Something that surely does not appeal to all retail investors.
Contributions to these funds
Con estas características que hemos analizado en fondos de inversión monetaria, no hay duda de que no es necesario invertir mucho dinero. Entre otros motivos debido a que no se conseguirá nada en el rendimiento que ofrecen. Si no, por el contrario, bastará con hacer aportes mínimos en el mejor de los casos y ante momentos de mayor inestabilidad y volatilidad en los mercados financieros. Para que de esta dinámica no se instalen pérdidas en nuestra cartera de fondos de inversión. Como parte de una estrategia muy defensiva o conservadora que tiene como target preservar el ahorro por encima de otras consideraciones.
Although on the other hand, there is also the impact that funds of these characteristics are not made to get large amounts of money. If not, on the contrary, it is a form of investment that has gone out of fashion since it is about models that our parents or grandparents used to make their savings profitable many years ago and that at that time had their reason for being and were. even profitable because the average interest was at levels very close to 7% or 8%. And therefore we could get a return on our savings that is now impossible to obtain.
Tones in these products
Whatever the case, there are other negative items in monetary investment funds that must be analyzed before a viable hiring of them from now on. As an example, that because of the commissions at the end you can lose money in these personal savings formats. As well as its null profitability after several years of permanence and that favors that after many years our balance in the fund is more or less as at the beginning. Without creating a savings bag as was our main idea and that can lead to real disappointment being installed in our state of mind as small and medium investors that we are.
Although to finish, it must also be taken into account that it is very unlikely that these financial instruments will make any type of investment. If not, they are for a very specific moment and I do not want to import a return to savings that is satisfactory for our personal interests. Whatever the case, and undoubtedly one of the most unsatisfactory investments that exist today, even below fixed-term bank deposits. Where the profitability at the moment is almost nil. And so it seems that it will be in the coming years, where there will be no choice but to take risks to obtain a return that is at least acceptable to all.
Investment grows this year
A certain truce in the trade war and the much more conservative attitude of the Central Banks towards possible interest rate hikes, has caused notable optimism in financial markets, which are recovering part of their May adjustments. Almost all equity benchmarks closed June positively, with returns ranging from 2.2% for the Ibex 35 to nearly 7% for the S&P 500.
Likewise, the debt markets registered price revaluations with their IRRs at historical lows, according to the latest data provided by the Association of Collective Investment Organizations and Pension Funds (Inverco). The yield of the German 10-year bond closed the month at -0.32%, while the 10-year Spanish public debt reached 0.39%. Whatever the case, the profitability of these products is still at too low levels to be accepted by small and medium investors. Without creating a savings bag as was our main idea and that can lead to real disappointment being installed in our state of mind as small and medium investors that we are.
