Investment funds have become one of the preferred instruments, and at the same time most profitable, that Spanish savers have to make their savings profitable. And in which it will be necessary to bear in mind the commissions that these financial products present. Because they can be more than one, and it is convenient that you know them before formalizing their contracts. It is even possible that you will achieve greater savings if you choose the least demanding funds in these payments.
As it is a product intended for investment, very popular among Spanish families, it will be necessary to analyze the expenses involved in its operations. In a way have replaced traditional fixed income products (term deposits, bank promissory notes, bonds, etc.), which offer a minimum return, around 0,50%, as a consequence of the lower price of the money issued by the community monetary authorities.
The effect of this monetary measure has led to the increasing number of savers opting for this investment model. Through its many variants: fixed income, variable, mixed, and even alternative funds. There is a wide offer to choose from, covering practically all financial assets available in the markets. Although perhaps at the moment what interests you the most are the expenses derived from their hiring. Fundamentally through the many Commissions generated by these products.
They carry many commissions
Unlike investments in the stock market, in this product there is not a single commission but several, and of a different nature, as you can see in this article. That will depend on the investment fund you select to make up your portfolio. Likewise, the percentages of the same will not always be identical, of course not, but will vary depending on the management companies that make them, and in a certain way even on the investment model. Habitually the commissions of equity funds are more expensive than those based on fixed.
The differences in its application reach such an extent that you yourself will be able to carry out more than one savings strategy aimed at hiring the cheapest funds. A very useful application tip is that, between two investment funds with similar characteristics, you should opt for the format that entails the least expansive commissions. Why overpay? Only experience in this class of financial products will help you develop a more correct cost containment policy.
Despite the fact that there are different rates in their hiring, they are not always applied. You must always keep it in mind. To do this, you must carefully read the contract (or its information brochures) in which the commissions included, and their amount, will be clearly specified. Usually range between 0,40% and 2%, although it will depend on each of the models, and on the strategy of the management companies. In this sense, they have a certain freedom to apply their commissions, as long as they do not exceed regulated maximums.
How many commissions can you pay?
Surely you are wondering about the number of commissions that these savings products can hold. They will not be like in traditional stock market operations, where you will only be charged for buying and selling operations in the markets. In funds, on the other hand, the picture is somewhat more complicated due to the nature of the product in question.
The main commissions that you can find in these models are those of management, deposit, refund, distribution or subscription. Although it will be necessary to continue emphasizing that not all of them always apply. It will be necessary to go case by case, so that you correctly understand its structure related to expenses. And if possible, try to get the maximum savings each time you go to invest your savings in any of the investment funds.
- Management commission: it will be a mandatory expense, whatever the fund you subscribe, and it is the expense that the manager will charge you for managing the shares acquired in your investment. Its amount depends on the subscribed fund, but with a maximum percentage that cannot exceed 2%. In national funds, however, expenditures will usually be below even 1%.
- Deposit fees: it is another of the disbursements that appear more regularly in these financial products, but unlike the previous model, it is not always presented. Although yes, their intermediation margins move under the same parameters as in the previous commission.
Optional expenses
From now on there are other types of commissions that do not always appear, it is even very difficult for them to be incorporated into the contract clause. Either way, you should know them in case you formalize a fund that includes these expenses at any time. And that they are the ones that make the contracting of these financial products more expensive, and among which the following stand out, some very curious indeed.
It is fundamentally about the subscription, redemption or distribution fees. And that they are incorporated, depending on the hiring process. They are less common, and rarely exceed the 1,50% barrier. However, they are the most decisive for them to affect a cut in the profitability generated from the funds. In addition, in the most common funds: monetary or fixed income, they rarely appear.
As a novelty in recent years, a new commission has appeared that is called by the management companies as of success. And whose amount can reach up to 20%. You have read the percentage correctly, but to understand it you will have to pay attention to how it develops. It is a rate that will only be charged if your investment is developed with strong returns. If this is not the case, do not worry, because they will not charge you, and its cost will be equal to zero.
It is a very peculiar commercial strategy to give confidence to small investors, after the bumps suffered by some funds during the past year, in which their shares have fallen by around 10%. With the implementation of this remuneration system try to generate greater security among customers, and invite them to subscribe their shares.
How to rationalize expenses?
There is another aspect that you should also take into account to carry out this almost correct hiring process, and of which you will often be unaware of its mechanism. First of all, the management (and deposit) fees, they are not charged to account as you could believe. Of course not, but on the contrary, they are discounted directly from their quotes. Come on, in other words, they will not affect your account balance, or the evolution of investment funds.
Others, on the contrary, are applied to the assets acquired, and it does represent an expense that is more difficult to contain. And they are generally represented by optional commissions. Only when you are going to direct your operations in the long term, around 5 years on average, can these operations be profitable.
Another aspect to consider is when you sign a investment fund in a currency other than the euro. And that in this case contemplates a commission for the currency exchange. These movements should only be made when you are sure that it is the most appropriate product to make your life savings profitable.
If, on the other hand, you want to optimize the operation with greater savings while containing expenses, there are some strategies that will help to achieve the objectives with greater success. One of them is to opt for the funds from the bank itself where you have the securities account open. They are more affordable, and generally their commissions are much less expansive.
Likewise, funds based on financial assets, both from fixed and variable income, are marketed at very bearable rates for your personal interests. Not surprisingly, you may even find that they move under the minimum margins. And also those of fixed income are cheaper than those based on the stock markets, especially emerging or other geographical areas not so conventional.
You should also know that the management companies can have absolute freedom to quantify the commissions of these financial products, always under a maximum limit. If you opt for the expansive models, you will not be able to make the slightest criticism of the manager, as it is in your full right. As an alternative, you will opt for other models less penalized by these expenses, but little more.
Techniques to lower costs
If you do not want to have excessive surprises, even once the investment fund has been subscribed, the best advice It will consist in that you read their conditions in detail before formalizing it. As a consequence of this strategy, you will be able to access the formats with the least expansive commissions on the market. And without reducing any degree of competitiveness to the product.
- Not because you pay more expensive commissions does it mean that the fund is more profitable. Of course not, but it will depend on the composition of your portfolio, and of course on the evolution of the financial markets.
- As the savings product becomes less sophisticated, their commission expenses also tend to decrease, until they reach the minimum that is implemented in the markets. It is not about skimping on these expenses, but on the contrary, on optimize choice.
- Sometimes more than you think it is the funds with the cheapest commissions that obtain the best results, even with the highest returns of the year. Not in vain, what it is about is to get a product that meets your expectations as a saver, and that fits your profile.