Multimarket fund: what is it and how does it work?

Among the various types of investment funds, the multimarket fund allows you to invest money in several different segments. Understand how it works.tracktracktracktracktrack

 

Conventional wisdom says that you shouldn’t put all your eggs in one basket. In the investment world, one of the products that best translates this saying is the multimarket fund.Multimarket fund is one of the types of investment funds that exist. Funds are basically investments made up of various other investments. That is, a person who puts their money in a fund is actually investing in different financial products that comprise it.

There are several types of investment funds, and the names give clues to what types of products (or assets) go into them. Fixed Income Funds , for example, are mainly composed of fixed income securities. Funds actions combine the actions of various companies.

The multimarket fund, as the name suggests, can take assets from several different sectors . Learn more about them below.

How does an investment fund work?

In a very simplified way (and pardon the tongue twister), an investment fund is basically an investment made up of several investments. This is a type of collective financial investment – ​​that is, several people can invest in the same fund. The total amount invested by everyone is the equity that will be reinvested in the various products.

How it works: Basically, a manager chooses several investments that exist in the market and groups them into a single financial product. The manager also defines how much of the money invested will go to each of these investments.

In other words, the manager is responsible for that fund’s strategy – it decides where the equity will be allocated, that is, it buys and sells the assets that comprise it. By investing in the fund, people are essentially empowering the manager to execute that strategy (ie, allocate and manage the resources).

Investing in a fund, by the way, is the same as buying shares from it: all people pay the same amount for a share and receive the same return for each one; the difference in profits is the number of shares each has. That’s why the fund’s investors are also called shareholders.

 

Why invest in funds instead of specific products?

One of the main logics of investment funds is diversification : instead of putting all the money in a single asset – be it a bond, a stock, or any other – the funds spread out what was invested in different financial products accordingly. with the strategy designed by the manager.

Thus, the yield is being pulled by the yield of several products – if one of them falls, the loss may not be so great, as other rising products make up for the fall.

This is also why funds have degrees of risk: funds that allocate a larger percentage of equity to riskier investments have higher chances of winning (and larger losses), for example.

What is a multimarket fund?

Understanding the logic of investment funds, it is easy to understand what a multimarket fund is: basically, a fund that takes financial products of the most varied types and groups them – the composition can include fixed income securities, stocks, currencies , metals , interest etc.

In other words: in a multimarket fund, shareholders give the manager the power to invest their money in various segments. This ends up further reinforcing diversification.

Multimarket funds are, therefore, investments in variable income – those in which it is not possible to guarantee a specific income, linked to some index. They may have a profitability forecast (which varies according to the strategy set up by the manager), but they also present risks .

As with other types of funds, the multimarket fund is a collective investment: the manager gathers the investors’ investments in an equity and applies this value in the various products. Profits and losses are divided among the participants, always proportional to the amount of shares each person holds – in other words, how much money each one invested.

Types of multimarket fund

Multimarket funds have categories and subcategories defined by the Brazilian Association of Financial and Capital Market Entities (Anbima), a body that regulates and defines good practices for investment companies.

What are the costs and taxes of a multimarket fund?

Multimarket funds usually have some specific costs and fees – but these can vary according to the company or brokerage selling the shares. It is essential to always look at these costs carefully before investing in a fund, as they directly impact the investment’s return (and most companies are difficult to understand).

Main rates of multimarket funds

  • Administration fee : charged for managing the fund and to remunerate the institutions involved in its administration. The percentage is annual, but the rate is proportionally discounted every day.
  • Performance fee: when the fund performs/returns greater than expected – as if it were a “bonus” for the manager, for delivering a better result;

Remembering: these fees are not mandatory and vary according to the institution and even the chosen fund.

What are the taxes of a multimarket fund?

Most multimarket funds are taxed on two taxes: the Tax on Financial Transactions ( IOF ) and the Income Tax (IR) – and the IOF is only levied on the gain if the person redeems their investment (withdraw the money) in less than 30 days.

Income Tax, on the other hand, is always levied on the profitability of funds and follows a regressive table of rates – that is, the longer the money is invested, the smaller the IR discount.

Funds can be classified as short term (asset maturity, on average, below 365 days) or long term (over 365 days) and this changes the income tax rates.

Income tax on short-term funds

  • Up to 180 days of application: 22.5% rate
  • From 181 days of application onwards: 20% rate

Income tax on long-term funds

  • Up to 180 days of application: 22.5% rate
  • From 181 to 360 days of application: 20% rate
  • From 361 to 720 days of application: 17.5% rate
  • From 721 days of application onwards: 15% rate

Income Tax collection on multimarket funds takes place in a biannual model called come-cotas

 

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