The size of the share is determined by the management company at the stage of formation of the mutual investment fund. In the future, the share is not subject to division, however, the legislation provides for cases in which the division of shares is carried out.
A share in an investment mutual fund is considered a registered security, which confirms the owner's rights to a certain share in the property of a mutual investment fund. Legislation prohibits specifying the par value of a share, therefore, its size is determined excluded in shares to the total amount of the mutual fund or the total value of the property of the mutual fund. Moreover, all shares are the same, that is, they certify the rights to equal shares in the property of the fund. But each participant can own a different number of shares, which allows them to make almost any amount of money as their own contribution. The market value of a share is not its size, since this indicator is constantly changing, it can increase or decrease depending on the current situation, the efficiency and results of the management company.
Can an investment share be split?
As a general rule, investment units certify the rights to whole shares in the fund, which are not subject to further division. However, sometimes there are situations in which the fractional value of the shares belonging to a particular participant is indicated. Legislation allows the determination of shares in this way in cases where the investment share is paid or not fully paid off, there is an issue, exchange of investment shares. If one member of the fund owns several fractional shares, then they are summed up for correct reflection in the reporting documentation. In most cases, it is impossible to dispose of the fractional part of a share on your own, since the legislation allows its circulation only together with whole shares. The only exception is that the depositor does not have whole units.
What should be considered when assessing the size of a share?
The size of a share in a mutual investment fund is always a share in relation to the common property. That is why all participants in a mutual fund are equity owners. But in this case, the disposal of shared property is implemented with certain peculiarities inherent in this method of property management. Thus, the participants in a mutual fund voluntarily waive the preemptive right to redeem the shares of other members of the fund, which ensures the free circulation of the shares, allows each investor on any working day to demand from the management company the redemption of the share, to dispose of it in a different way.
