What is an investment fund?

The investment fund is a legal vehicle whose main activity is investment. Unlike a commercial company, it has neither a productive nor a product to sell: its essential function is to receive money to reinvest it.

But the managers of an investment fund are not inactive: they need to identify the best opportunities, trade them at the best prices, grow them, and resell them with added value.

Beyond this starting point, investment funds are very varied vehicles. They are distinguished by their portfolio of assets, their management, their legal structure, the place of establishment, their investor, their size, etc.

Between a fund managed by a single individual to invest in local businesses, a state-owned sovereign wealth fund, and a multi-billion-dollar pension fund managed by a multinational, there is almost an infinite variety of funds.

Moreover, in order to classify the thousands of existing funds, the practice continues to invent new terms: venture fund, private equity fund, hedge fund, pension fund, sovereign fund, fund fund, etc.

Within these categories, there are still distinctions. A fund of Venture Capital, those dedicated to investing in start-ups with high technological potential, will be displayed, according to its targets, as being specialized in BioTech, FoodTech, SportTech, AgriTech, FinTech ... Depending on the maturity of the companies in which it invests, it will be seeded, early stage, stage A, serian B ...

Funds therefore have a common characteristic, that of focusing on investment. As investment opportunities are so diverse, dozens of factors need to be taken into account in order to define these vehicles more precisely. Each has its own strategy that raises many legal and financial issues.

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