Investment company with variable capital

SICAV ( Investment company with Variable capital ) form part, with CPF (Investment funds), of the family of OPCVM (Undertakings for collective investment in Transferable securities).

A SICAV is a company which aims to share the risks and the benefit of an investment in Transferable securities (action, obligations, etc), negotiable evidences of indebtedness, Repo S and other financial instruments authorized either by the regulation or by the statutes of the SICAV. From a legal point of view, the SICAV have a legal entity. The company has a board of directors and the shareholders of the SICAV profit from one right to vote at the annual general meeting.

The SICAV is founded by a finance company named promoter and an agent who assumes the control of the regularity of the decisions of management.

Illustration of the interest of the SICAV

The principle of the SICAV and more generally of OPCVM is the diversification of the risks. If one has a weak amount to invest, one is generally tiny room to become purchaser of only one title of company. In the event of strong fall of the title, the wallet of the investor will drop in the same order of magnitude. Let us consider now funds bringing together several investors. Incur to manage is higher. It thus will be possible to buy several titles and thus to diversify its investments for an identical amount since the investor has on the one hand this bottom. In the event of fall of the one of the titles composing the funds managed, the value on behalf of the investor will be affected only with proportion of the title in the funds. With final, the value of the managed bottom will know quite less variations in comparison with the value of a wallet made up of only one title.

While investing in a SICAV, rather than directly in a Transferable security one thus reduced the risk (and the potential of profit) of his investment.

Nevertheless, it is advisable to quote some disadvantages:

  • Of the application rights
  • Of the overheads which can sometimes be high
  • the SICAV are not quoted on the stock exchange. The diffused price, or realizable value, corresponds to the value of the funds divided by the number of shares of the adjusted SICAV of the overheads.
  • a subscription for unknown course (the realizable value is known only the following day).
  • It is possible to negotiate the SICAV only once per day. Today, the investors turn themselves towards the Trackers which have the advantages of the SICAV without presenting all the disadvantages of them, in particular in terms of Liquidité and of overheads.

SICAV with compartments

Certain SICAV propose various compartments which will be managed in a different way. For example, the money of the one of the compartments will be invested in risky European actions while the money of another compartment will be invested in “quiet” obligations. This system of compartments avoids the creation of too many companies and the bureaucracy which would accompany it. Wrongly, one speaks about SICAV or funds for these compartments.

See too

External bonds

  • Bonds towards the community legislation
  • teaching Guides of the MFA

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