Mad Rich

The collection of money set aside for investment is stable for closed end funds. However, it continuously changes for mutual funds on the basis of issuing and redeeming of shares.

Protection of investment decisions

The mutual funds have an open end structure. These pose hurdles for the investment manager in phases of tremendous swings of feelings. Individual investors have an inclination to invest money in funds while at the top of the market. Due to this the fund manager has two options – increasing the cash position or purchasing stocks at high prices. In the opposite, when the market is at the bottom position, individual investors try to extract money from the funds. Due to this, the fund manager is again left with two options – selling the stocks at less prices and the other is committing a large part of funds to encash. This second option is a cushion against any redeeming. As the mutual funds have an open end structure, the managers are forced into wrong alternatives. Some of these are buying at high market values, selling at low market values or remaining without investment. In closed end funds, the investment decisions of the investment manager are not effected by such a foolish demeanor or individual investors. Although the discount may widen, the quantity of money meant for investment remains constant.

Increased Investment Opportunities

The closed end format makes investment easy in assets not readily converted to cash and at times risky securities and markets. It is frequently found that the maximum beneficial investments occur in three types of situations – a company in the initial phase of growth, the company as an emerging market in developing countries or recovering from bankruptcy conditions. It is found that such investments are highly illiquid. The mutual funds generally avoid investing in these markets or instruments. The reason is that there exists a risk that investors would panic during hostile market conditions. They would coerce the sale of the assets at prices that have been lessened temporarily. However, closed end funds need not become anxious about such recoveries and can make investments not readily converted to cash. The investment can be of the following types – in thinly traded markets (eg. Portugal Fund, Turkish Investment fund), in extremely small companies (eg. Royce OTC Microcap) or in private placements (eg. H&Q healthcare).

The CIM mutual

The CIM mutual is another investment pool. This has the following rules - $100 minimum investement, 3% fee when investing, 7% fee when selling back units, 7 to 12% target monthly ROI. The profit sharing system is like a real mutual fund. The profits reflect the unit price, while there is no need to sell or buy a whole number of units. As an example, if the current unit price is $6.549 per unit, if $100 are invested, it becomes possible to buy 15.27 units.

CIM Mutual is not something of great excitement. However, it is a useful method of diversification. The admin is a professional and reliable individual and so the possibility of fraud is less. This has been verified by Chancer and Azure.