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Investing in Mutual Funds

Mutual funds pool money from many investors, who transfer the money to asset management companies. Fund investors own all of the assets invested in mutual funds.
There are three basic types of mutual funds: open-end, closed-end and interval. Units of open-end mutual funds are redeemable on demand. Units of interval mutual funds may be redeemed at dates specified in its prospectus. Units of closed-end mutual fund are redeemable at a fund’s termination or at dates defined by the regulator.

Investors should usually expect returns that are higher than bank deposit interest rates, but the returns are not guaranteed. A large return on short-term investments in the fund is unusual.

Neither interest, nor dividends on investments in a fund are payable under existing regulations. Proceeds are payable only when units are redeemed.
A “unit” is a nominal, uncertified security, that’s accounted for by a book entry at a registrar. To purchase a unit from Metropol Asset Management, an investor should apply for a unit and transfer money to the company or to the company’s authorized distributor. A specialized registrar records the number of units owned by each investor.
Units of Metropol AM mutual funds are redeemable on any work day and may be exchanged for the units of other Metropol AM funds.
When individual investors redeem their units, they must pay 13% income tax as residents, or 30% as non-residents. Metropol Asset Management acts as a tax agent and pays the tax on client’s behalf.
Moreover, units of the company’s mutual funds are available on the MICEX Stock Exchange through any broker in the “Unlisted Securities” section. This is the easiest way to buy the funds’ units, unless a distributor authorized to sell, exchange and redeem Metropol Asset Management units is available in a client’s city of residence. 
In all, investing in open-end mutual funds brings a variety of advantages:

• experienced portfolio managers
• liquidity (units are redeemable on any business day)
• diversification (diversified securities are selected to balance risk and return)
• accessibility (low initial investment minimums)
• government regulation (an advanced system designed to protect investors’ rights and interests).

Metropol Asset Management offers differing investment strategies:

“Metropol Zevs”, an open-end bond mutual fund

Open-end bond mutual fund “Metropol Zevs” was incepted in December 2003. The fund seeks long-term capital appreciation and asset preservation. The fund may appeal to conservative investors whose risk tolerance is below average and who seek returns higher than bank deposit interest rates. The fund seeks to preserve clients’ assets, minimize investment risks and provide returns that outperform inflation.

“Metropol Afina”, open-end hybrid mutual fund

“Metropol Afina”, an open-end hybrid fund, was incepted in December 2003. The fund’s investment strategy seeks capital appreciation through a balanced asset allocation in bonds and equity securities of different classes. The investment strategy targets moderate risk while providing an adequate return. To this end, Metropol Asset Management focuses on reducing risks and seeks to earn the same average return as the stock market.

The fund may appeal to investors looking to reduce the risks related to investments in equity securities.

“Metropol Zolotoe Runo”, an open-end stock mutual fund

The open-end stock mutual fund was incepted in December 2003. “Metropol Zolotoe Runo” seeks capital growth through investing in income-producing securities. In managing the fund, Metropol AM investment professionals prioritize providing the maximum  possible return. The fund may appeal to investors whose risk tolerance is above average and who seek the highest possible return.

“Metropol Poseidon – MICEX index”, an open-end index mutual fund

The fund seeks long term appreciation through investing in securities which are included in the MICEX index. The fund managers aim to maintain the asset allocation which replicates the MICEX index composition. 
The MICEX index is a Russian stock market composite index which is calculated based on the market price of 30 most liquid securities. The companies included in the index are the most representative of the Russian market.
The fund seeks to earn the same average return as the stock market.

Closed-end Real Estate Fund “Metropol Olymp”

A closed-end real estate mutual fund is an excellent alternative for investors who seek to allocate their assets in commercial properties.
The real estate market is more stable, predictable and income-producing compared to the fund industry as a whole. Moreover, returns on real estate investments far outstrip bank deposit interest rates.

The current supply of real estate cannot meet the growing demand for commercial properties, and this offers unparalleled opportunities for real estate funds and investors who seek to diversify their assets by investing in the secure and return-generating financial instruments of closed-end real estate funds.

The Fund’s investment strategy focuses on buying commercial and industrial properties either to reconstruct and restructure them or to let the properties in order to add value to the real estate.
 
In September 2006, to meet the demand for new investment vehicles in the sector, “Metropol Olymp”, the closed-end real estate mutual fund, was launched.