Investment Fund Units

An investment fund is a structure that pools the capital of a number of investors and channels it into a particular asset type or investment strategy. Typically, investment funds diversify their capital across various investments to mitigate the risk of capital loss.

In the Kyrgyz Republic, there are two types of investment funds – joint-stock and unit funds. Pension funds are distinguished as a separate category based on the uniqueness of their assets. Investment funds also differ based on whether investors can “exit” the fund before its maturity. Open funds offer investors immediate access to the market value of their shares, interval funds allow access at certain intervals, while closed funds necessitate investors to wait until the fund’s expiration.

Investment funds for retail investors are strictly regulated by law. Fund managers are required to comply with numerous regulations designed to protect investors, including prohibitions on purchasing specific assets, a requirement for diversification, etc.

Closed-end mutual funds for qualified investors are subject to a significantly lesser degree of restrictions. They can invest in almost any asset, including even cryptocurrencies.

The BTS Stock Exchange permits the listing of all types of funds, including closed ones. Brokers and asset managers who are purchasing units of closed-end funds must ensure that they are executing such transactions exclusively on behalf of qualified investors.