sai

n. 4/2000

It may strike but at the present, but there's an obligation compelling all companies: being plain. Customers, of whichever sector, won't anymore accept supinely anything it's offered them. Customers want to know and want to understand. There're enterprises that perceived this evolution and enterprises that was not sensitive to that and so go on acting as they did some years ago. Useless to underline the briefness of their way.

If, as mentioned, being plain is a rule that must be applied to all sectors, it's sure that there are some of them where this requirement is stronger. The financial sector, for example, is surely one where there's a real esoteric language, plenty of terms meaning nothing for the most. Very often, indeed, even of words of common use, the real meaning is not wholly known.

That's why the SAI Investimenti in realizing new informative statements of its own investments found, the SAI Fondi, decided to devote the foreword to explain exactly what Investment Fund means and which are its main features, as well as the risk typologies.

The Investment Fund is a collective and joint property, constituted by the amounts paid out by partakers that are invested in financial activities.

The fund is furthermore defined as 'movable' since its amount patrimony is employed exclusively in financial securities and products, and another aspect, the utmost important, is that it's “open” since the underwriter can require at any moment to disinvest the shares he underwritten. Another very important aspect that must be highlighted is that the fund's property is distinct, at any effect, from the estates of the savings managing company, from those of the single partakers and any other funds managed by the same company; notwithstanding it's important, in selecting the company, to rely on consolidated bodies that ensure, by their professionalism and variety in offer, to convey one's own savings toward the investment fitting the most one's own features.

As any other investment, nevertheless, even the purchase of funds shares involves risks.

Taking part to a fund involves indeed the risks related to the possible variations of the share value that, on their turn, are affected by the oscillation in financial instruments values in which the funds' resources are invested.

This regard it must distinguish between the risk related to investment in capital securities (as for example shares) and those related to investment in debentures (as for example: state bonds, bonds).

In general the investment in shares is more risky than the investment in debentures. Indeed share holder's risk depends on the fact that by acquiring such titles he becomes partner of the issuer company and participates this way to the economic business risk, that means that the holder benefits from profits when the company produces income and he bears the negative consequences (cut or furthermore loss of capital) when the company is in troubles. Debenture holders, instead, by becoming financers of the company or of the bodies issuing such titles (hence having the right to receive interests, and at the maturity, the lent capital) risk not being remunerated only in case of financial difficulty of the company or issuing body. For both shares and debentures, the following risks must be taken into account:

a) Risk related to the title price variance: such variance depends on the issuing company peculiar features (assets solidity and economical outlooks of the sectors where it operates) and on the reference markets trends (shares are affected by the trend of the shares markets where are negotiated, while debentures are affected by the market interest rate fluctuations that run through as much in a stressed way as longer is the residual duration, that is the time period to the title maturity). Titles price variance involves also the risk of capital account losses in the case of sale of the title before its natural maturity.

b) Risk related to the titles liquidity: titles liquidity, that is their aptitude to become promptly money without losses in value, depends on the features of the markets where they are negotiated.

In general titles treated on the ruled markets are more liquid, and so, less risky since they are easier to disinvest than the title not negotiated on the mentioned markets. The absence in the stock exchange list turns more complex the appraisal of the effective value of the title, whose determination is left to discretional evaluations.

c) Risk related to currency the titles are denominated: investments in financial instruments, denominated in a currency other than the Euro is more risky than the investments in such currency since it must be taken into account the volatility of the exchange ratio between the reference currency (Euro) and the foreign currency of the investment. In detail, the exchange ratio with the currencies of the developing countries can be so volatile to condition the whole result of the investment;

d) For investments in foreign currency expressed titles it must be taken into account the risks related to the political-financial situation of the country at matter. Such risks are remarkable for the developing countries.

Since everyone has his own propensity to risk, it's important to individuate the fund typology that better fits one's own requirements and features.

By this point of view SAI FONDI offers a wide range inside which it's possible to find the one that fits us better (see the table), being aware to have entrusted our savings to whom is on market since time and successfully.