Introduction to Saudi Funds
1. What is Fund? How is it different from stock?
A fund pools money from many investors and is managed by professional fund managers who invest on your behalf.
Difference from stocks:
- Stocks: You choose companies and bear the gains or losses yourself
- Funds: Professionals invest for you, with more diversification and relatively lower risk
2. What types of funds are there? (Money Market, Bond, Hybrid, Equity)
There are four common types of funds, with increasing risk and return potential:
- Money Market Funds: Low risk, stable returns (similar to cash management)
- Bond Funds: Invest mainly in bonds, relatively low volatility
- Hybrid Funds: Mix of stocks and bonds, moderate risk
- Equity Funds: Invest mainly in stocks, higher volatility and return potential
3.What fees are charged when buying a fund?
Generally, the following fees may apply:
- Subscription fee: charged when purchasing the fund
- Redemption fee: charged when selling the fund
- Management fee: charged by the fund company, accrued daily (already reflected in the NAV)
- Custody fee: charged by the custodian (e.g., a bank), also reflected in the NAV
The actual fees charged are subject to the final settlement.
4. How is fund return calculated?
Fund returns primarily come from changes in your holdings and net asset value (NAV). The NAV and your holdings are updated only when the fund is settled each day.
Calculation method
- Real-time return on T day= Real-time fund market value on T day− End-of-day fund market value on T-1 day− Net subscription amount on T day
- Total return= Cumulative fund return as of day (T-1) + Real-time return on day T
Update timing
Once settlement is completed, the updated return will be displayed.
This content is for educational purposes only and does not constitute investment advice. Please carefully review the fund's terms and conditions before investing, and make decisions based on your own financial situation and risk tolerance.
