Bankinter takes a further step in its innovative trend in joint venture vehicles for clients with the creation of a leading fund in the Spanish market: "MVB Fund" It is a fund that was created with the aim of investing in disruptive companies in the Silicon Valley ecosystem, the cradle of technological innovation. A sector in which a wide range of investment funds are being established in order to improve their profitability, although on the contrary it entails a greater risk in the exposure of savings.
The ultimate goal is to offer a differential investment alternative to Private Banking clients in a market niche in which few investors can enter, such as technology companies with great potential that are on the way to becoming the 'Uber', 'Facebook', 'Netflix' or 'Amazon' of the near future. These types of companies, which are born as start-ups And then they become unicorns - companies valued at more than $ 1.000 billion - are, first, difficult to detect early and, second, difficult shareholding.
In addition to the latter, the opportunities to participate in the shareholding of this category of companies have diminished in recent years since they take more and more time to go public. To enter this type of technology sector companies, Bankinter has created “MBV Fund”, a fund of funds, that is, a fund that will invest in venture capital funds (venture capital) which, in turn, are present in the shareholders of these companies with high growth potential.
Invest in technology companies
In order to invest in the best funds in the world of venture capital who have positions in future unicorns, the bank has partnered with well-known tech entrepreneur Martin Varsavsky, a pioneer in various business initiatives in the Spanish market and in other countries, like the United States or Canada. It is an initiative that has already been taken up by other international investment funds and that are marketed by different foreign managers.
The technology sector is one of the most special that there is at the moment in the equity markets. It is very cyclical And in fact, you can earn a lot of money for its special characteristics, since its revaluation potential is broader than in other more conventional or traditional segments. But for the same reason you can leave a lot of euros on the road because volatility is always present in their prices, although in this case it is investment funds. With a very wide difference between its maximum and minimum prices.
Funds with higher fees
Another of the common denominators of investment funds in technology companies is that they generally have commissions that are more expansive than in other funds. To the point that they can approximate up to 2% on the amount of the invested capital. Therefore, it is worth assessing whether these investment funds should be hired with this increase in management and maintenance expenses. Everything will depend on the profile you present at the moment as a small or medium investor. Because it may not be the most suitable product for your personal interests.
While on the other hand, you also have to appreciate that this class of investment funds so special are aimed at higher terms of permanence, in the medium and long term. Which are the periods where their final profitability can best materialize, although with the sale that you can transfer them at any time and situation. Without this operation costing you a single euro since it is totally free from the beginning. The average interest they have been offering in the last five years round levels around 5% or 6%. Above the interest generated by the main national and international stock market indices.
Business opportunities
Of course, hiring it is a real business opportunity provided that its evolution is satisfactory for the interests of investors. Beyond other considerations of a technical nature and perhaps also from the point of view of its fundamentals. Because in effect, investment funds in technology companies have a very high revaluation potential and that can get closer to 45% in most of the cases. But also with the obvious risk that they will depreciate, especially in the shorter terms. Hence, you must be especially cautious when hiring.
While on the other hand, you cannot forget that investment funds in technology companies perform better in expansive economic periods. While in recessions it has much more trouble appreciating in equity markets. That is why the problem to subscribe it at this time when it seems that it is going to land an economic crisis of special intensity in the next few months. With which, the risks may be greater to make the savings profitable in an efficient way.
What are these tech funds like?
This class of financial products are fundamentally characterized by the need for a less knowledge of the operations carried out that derive from investing in a market index without currency risk, that is, whose currency is the euro. As well as because they are companies not strongly consolidated in the business panorama. They are based more than continued growth, on expectations and if this is not met, it can be reflected in their prices and you can see this in your income statement.
While on the other hand, it must be emphasized that the minimum investment to enter these funds depends on the characteristics of each one of them, but currently there are products that can be subscribed from only 100 euros. Although for the investment to produce the desired effects in terms of the perceived profitability, it is necessary to deposit around 3.000 euros at least. As your monetary contributions are more demanding, the higher the profitability of investment funds in technology companies may be.
Help diversify investment
One of the greatest attractions of these investment funds, in terms of their contracting, is that they allow their subscribers to have their capital invested in a “basket” of securities listed in the European benchmark index, without having to risk a only one euro in a stock market bet that aims at a single value, thereby drastically eliminating risks, since generally these packages of actions come from different sectors and countries with which the negative tendencies that one or any of them might show are generally neutralized.
It also means being in buyer positions of highly financially solvent companies that will be the ones that perform the best at the moment when the European economy is finally coming out of the economic crisis that has gripped its equities so much in recent years. However, it will be the investor in the last instance who opts for the composition of these portfolios that the managers have previously prepared, either through defensive proposals without excessive risk, or by others that involve a greater commitment for its subscribers, but that as compensation also offers greater possibilities of revaluation in the coming months in the event that European equities return to an upward path.
Tips for getting hired
Investment funds in technology companies maintain constants that are generally common to all these financial products. Among those that stand out below we expose you:
- These funds are based on companies with the highest specific weight of European and American equities and in some cases it will be a small problem for you to subscribe them through the purchase and sale of shares on the stock market.
- These are products that base their profitability on the expectations they are creating in the equity markets. For this reason they are very volatile and in any case they bring more risks in the operations carried out.
- They are not intended for a very well defined small and midsize investor profile, as in the case of defensive or conservative retailers where security prevails over other main considerations.
- It must be a portfolio of technology sector securities that can be combined with other financial assets with the primary objective of preserving capital in the most adverse times for equity markets.
- They are not the investment funds with which you were used to operating until now and therefore you will have to print another class of investment strategies.
- In either case, investment funds in technology companies belong to a sector segment that is certainly less well known by average investors.
- And finally, you should not happily subscribe to them because they can create more than one problem for you from now on. In the form of a decrease in the capital contributed to this financial product.