INVESTMENT FUNDS AND THEIR ROLE IN THE STOCK MARKET: ETF, MUTUAL FUNDS, HEDGE FUNDS

Анотація

The financial market is constantly developing and becoming more complicated: new financial instruments appear, the approaches to existing ones are improved and modernized, parameters and methods of calculations change. Investing in mutual funds is one of the most applicable tools to use in the stock market, which suits investors with different goals and interests and requires minimal involvement in asset management. The article examines the role of investment funds in the stock market: portfolio diversification, liquidity, professional management, access to markets. The definitions of «exchange-traded funds (ETFs)», «mutual funds», «hedge funds» are given. The article reveals the concept of stock exchange investment funds as an investment tool on the stock exchange. The scheme of operation of stock exchange investment funds, consisting of four stages, is given. The following advantages are considered: the investor does not need to independently conduct a deep analysis of various securities, most of the work of asset management is undertaken by the management company, the owner of the shares is allowed to hedge, the shares of investment funds are much cheaper, they are easy to use, they are of interest to the industries in which they are applied, and also available not only to medium and large, but also to small investors. Exchange investment funds by countries of the world are analyzed. The advantages and disadvantages of investing in exchange investment funds are studied. The US TIAA ESG mid-cap index for 2018-2023 was analyzed. The advantages and disadvantages of investing in mutual funds are characterized. It is explored the types of available mutual fund investment vehicles to: types of mutual funds, fund performance, fees and expenses, fund manager. The dynamics of the share price of the first Ukrainian hedge fund RAISEN was analyzed. Features characteristic of hedge funds are considered: a private investment fund with weak legislative regulation, the use of a wide range of strategies and tools for portfolio formation, management by highly professional investment managers, the direct dependence of managers’ remuneration on the fund’s profit, openness to a limited number of investors. The difference between a hedge fund and other investment funds is established.

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