Creating an investment fund is an interesting way of a non-bank external or alternative financing from investors as part of a fundraiser. With this form of financing, there is no repayment of the borrowed capital or related interest. Investors are remunerated on the capital gains realized on the resale of their holdings. Fundraising by creating investment fund does not require an input of personal guarantees. They provide a possibility to achieve a broader diversification among a number of different assets and thus spreading risks. Diversifying the investments can reduce the negative impact that an investment may undergo in a single asset class.
Investment funds Luxembourg automatically bring diversification to the portfolio, because they contain a large variety of titles. Also by pooling the capital, investors can share costs and benefit from the advantage of investing larger amounts. Another interesting point about investment funds is their liquidity. Investors have the advantage of getting their money back immediately, in case of open-ended schemes based on the Net Asset Value at that time. In case the LU investment fund is close-ended, it can be traded in the stock exchange, as offered by some schemes.