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Investment fund securities

An investment fund security is an equity security that entitles you to a portion of the net asset value of a fund.

When you buy investment fund securities, you're pooling your money with that of other investors.

The pooled amounts are managed on behalf of all the investors by a portfolio manager registered with the AMF. The money is invested in different types of investments in line with the fund's investment objectives. An investment fund's investment objective could, for example, be to preserve capital, to generate a steady income stream or to maximize capital growth.

Two types of investment funds available on the market are: mutual funds and non-redeemable investment funds. Mutual funds are better known and more popular. Generally, mutual fund units are offered on an ongoing basis and can be redeemed on request at a predetermined frequency (e.g., daily) and at a price based on their net asset value. Shares of non-redeemable investment funds, on the other hand, are offered at the time of an initial public offering (IPO) and, with some exceptions, cannot be redeemed on request. Unlike mutual funds, most non-redeemable investment funds have a predetermined liquidation date (e.g., five years from the IPO date). To enable investors to sell their securities before the planned liquidation date, non-redeemable investment fund shares are often listed on an exchange, where they generally trade at a lower price than their net asset value.

Before choosing an investment, you should assess your needs, financial situation and goals, risk tolerance and investment horizon, and consider any related fees and tax consequences. Gather information and, if necessary, consult a representative who holds a certificate issued by the AMF.

To learn more about the basic features of investment fund securities, watch our web capsules (in French only)