Investment company

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An investment company is an investment fund in the legal form of a stock corporation or limited partnership that collects liquid funds from investors in order to invest these funds in various asset classes (such as securities , real estate or raw materials ) according to specified investment strategies . This is attested to the investors in the form of investment certificates.


In principle, an investment company may not have any legal form. In most countries, the law provides for legal forms that are tailored to investment companies. One example of this is the investment company with variable capital that is widespread in Europe ( French société d'investissement à capital variable , SICAV for short).

The investment club is not an investment company, but is often organized as a company under civil law in Germany or a simple company in Switzerland.

While closed-end funds have a predefined investment volume, investment companies with variable capital can grow at will by issuing new shares. The value of the individual unit always corresponds to the current fund assets divided by the number of units issued. The money raised through the issue of units is used to purchase a portfolio of securities (such as stocks and bonds ), real estate , money market papers or other assets . If the value of the portfolio increases, the investor profits, because his share also becomes worth more. If the value falls, he bears the losses. Depending on the legal form, the fund assets belong directly to the investor (for example in the case of an investment club) or to the fund company (for example in the case of a stock corporation) in which the investor holds his share. In the case of an investment company taxed according to the principle of transparency , the fund assets are treated for tax purposes like a direct investment by the investor.

If the investor only owns the fixed assets indirectly, he bears the issuer risk in addition to the investment risk . The investment risk is that the value of the investment declines; the issuer risk is that the investment company becomes insolvent. This risk arises particularly when an investment company manages several funds, pursues further business activities, or enters into other liabilities. In the case of capital investment companies (KAG) (a GmbH or AG specially regulated under German law that issues units in funds it has established to investors for money), the investor is protected by the legal concept of the special fund, which allows the different issues to be viewed separately Prescribes investment instruments and thus minimizes the issuer risk.

In Germany, as in many other countries, investment companies often require government approval before they can start their business operations and are monitored by the respective financial supervisory authority. If a fund is set up again, this must also be approved, and the current unit prices must also be published regularly.

Investment companies based in different countries are often grouped together. European groups often consist of an investment company in the home country of the parent company and another in Luxembourg and / or Ireland. In such groups there may also be companies that do not set up any funds themselves, but carry out related activities (see “Business processes of an investment company” below). Sometimes the whole group of companies is referred to as an investment company. The holding company, which is at the head of such a group and does not itself operate any business, is sometimes referred to as an investment company.

Legal issues

The legal term “investment company” is legally defined in Section 1 (11) to (13) KAGB and protected by law under Section 3 (1) KAGB. It may only be managed by capital management companies (KVG) within the meaning of the KAGB. According to Section 1 of the KAGB, special funds are the investment funds of investors that must be kept separate from the funds of the capital management company. As a result, in the event of insolvency of the KVG , the customer funds are not part of the insolvency estate of the KVG and are retained.

The investment company with variable capital may only be operated in the legal form of a stock corporation in accordance with Section 108 KAGB. Your shares are to be issued as no-par shares ( Section 109 KAGB), capital increases are permitted in accordance with Section 115 KAGB, and capital reductions in accordance with Section 116 KAGB. According to Section 118 KAGB, an investment company with variable capital must contain the addition “with sub- fund ” or a generally understandable abbreviation of these terms.

Supervisory authorities

country Germany Austria Switzerland Liechtenstein
Supervisory authority Federal Financial Supervisory Authority (BaFin) Financial Market Authority (FMA) Swiss Financial Market Supervisory Authority (FINMA) FMA Financial Market Authority Liechtenstein (FMA)
Legal text Capital Investment Code (KAGB) - until June 22, 2013: Investment Act (InvG)

Law on Integrated Financial Services Supervision ( Text of the FinDAG )

Financial Market Authority Act (FMABG) Federal Act on Collective Investment Schemes ( KAG ; PDF; 235 kB) Financial Market Supervision Act (FMAG) Act

Investment Company Act (IUG) Act

Investment Company Ordinance (IUV) Ordinance

Advocacy BVI Federal Association of Investment and Asset Management e. V. Association of Austrian Investment Companies (VÖIG) Swiss Funds & Asset Management Association (SFAMA) Liechtenstein Investment Fund Association (LAFV)
Number of investment companies 76 23 44 27
Total number / volume of funds ~ € 1,329 billion 2,061 funds / € 137,463.46 million 350+ funds / 25+ billion CHF

Foreign investment associations worldwide are available from the German fund association BVI. A list of government supervisory institutions can be found under List of Financial Supervisory Authorities .

State control

State control of an investment company depends on the country in which the company is located. Because it has to meet the legal requirements in the respective country. The conditions z. B. the Securities and Exchange Commission (SEC) in the USA are in many respects looser compared to the requirements of the KAGB in Germany. It was like that B. until 2004 in Germany to set up hedge funds . In the USA, this type of fund was allowed much earlier. An investment company that has its headquarters in a so-called offshore financial center , e.g. B. on the Cayman Islands . Here an investment company is not subject to any external control over how it manages the money of its investors.

In Europe, minimum requirements for government supervision of investment companies are set out in Directive 85/611 / EEC . However, this directive does not cover all types of investment companies and funds.

Business activity

The operational organization of an investment company consists primarily of fund management , risk controlling , sales and administration . While the fund management makes investment decisions on the basis of the investment strategy and carries out the asset allocation, the risk controlling - which is organized separately by separation of functions - deals with the measurement and monitoring of risk positions and the financial analysis of the associated loss potential. With the sale of the investment certificates, for example through credit institutions, the sales department ensures the refinancing of the investment or special assets. The administration ensures the fulfillment of the company's administrative tasks, but does not take over the asset management of the investment or special fund. The investment companies are not allowed to hold and manage their investment or special assets themselves, but have to give a depositary an order for safekeeping and administration ( UCITS : Section 68 KAGB , alternative investment funds : Section 80 KAGB, real estate : Section 241 KAGB).

An investment company often works with various financial service providers . Fund accounting is often carried out by a service company. A depositary takes over the safekeeping of the fund's assets. In addition, the depositary monitors the business activities of the investment company. It is obliged to do this in Germany ( Section 76 KAGB, Section 83 KAGB). The checks to be carried out by the custodian relate, among other things, to the legality of the transactions, the correctly calculated unit price, collateral management , the investment limit check and market compliance. The administration of the share accounts of the individual investors and the payment transactions are mostly carried out by different credit institutions . Some funds have an outside fund manager who advises the investment company on individual purchases or sales for the funds. The management of the fund portfolio can also be completely outsourced to a suitable third party. A broker carries out the trading of the securities on the stock exchange . The sale of investment fund shares to customers is usually carried out by several sales partners.


Individual evidence

  1. BaFin; Status: Nov. 15, 2013 ( Memento from December 13, 2013 in the Internet Archive )
  2. VÖIG / OeKB; Status: 05/2005
  3. SFBC; As of June 3, 2005
  4. FMA; Status: 12/2006
  5. BVI, as of Sep. 31. 2008
  6. Foreign investment associations worldwide ( Memento of February 3, 2007 in the Internet Archive )
  7. Custodian circular 06/2010 ( Memento of 7 July 2011 in the Internet Archive ) (PDF; 80 kB)