A fund usually refers to a savings and investment product that consists of securities and/or fixed income investments.
By investing in a fund, you receive a fund unit that, in the same way as a share, entitles you to a proportion of the fund’s returns. A fund’s returns are based on the returns on the investments it includes. The returns on investments can be dividends, interest and value increases and decreases of the investments.
Funds can be divided into three categories based on their investments.
Funds are a suitable option for both savers and investors because funds are an excellent way to save and to diversify your investments. The so called active funds are managed by Nordea’s professionals so you do not have to monitor the markets or companies as closely as for example in direct equity investments.
When choosing a fund, it is good to remember that expected return and risk go hand in hand. Low-risk funds have lower expected returns than high-risk funds.
When inventing in an index fund, you need to be a bit more proactive than with active fund investments. In an active fund a Portfolio Manager will monitor the markets actively and make decisions to buy and sell based on that, but if you invest in a passive index fund, you have to do those decisions yourself.
From Nordea’s fund selection you can choose a fund that best suits your savings period and risk level. The funds for savers that have the lowest risks are fixed income funds that will only invest in the fixed income markets. Balanced funds are funds that invest in both fixed income and equity markets. The more a balanced fund invests in equities, the higher its risk level gets.
The balanced funds with the lowest risks will invest only a small proportion in the equity markets. Nordea has a wide selection of balanced funds with different risk levels. The funds that invest only in equities, ie equity funds, have the highest expected returns but also the highest risks.
If you want to read more about individual funds, visit the Funds Now service.
A subscription fee is charged on a subscription (purchase) of fund units and a redemption fee on a redemption (sale) of fund units. You can subscribe for fund units for a reduced fee via Netbank.
Each fund pays the fund management company a management fee, which covers such fund management costs as value calculation, accounting and reporting.
The amount of the management fee is given as an annual fee. The management fee is deducted in the calculation of the daily net asset value per fund unit, and is thus not charged separately. The fee includes a custody fee for fund units.
You can view the fees for each fund in Funds Now.
Funds are taxed in accordance with the principles of capital taxation. The return on fund units is capital income in the same way as the sales profit from the redemption of fund units is. The tax rate for capital income is 30% for up to 30,000 euros and 34% for the exceeding amount.
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