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The ABC of investment funds

How do I start investing?
What is a securities account?
What is an investment fund and who is it suitable for?
Why should I invest in funds?
What funds does SEB offer?
What is fund saving?

How do I start investing?

STEP 1

• Think about your goals and possibilities. How much are you prepared to invest?
• For how long do you want to invest in a fund?
• What income do you want to earn and how much risk are you prepared to take with your investment?

STEP 2

• Visit you nearest SEB branch for an investment consultation. Our investment consultants help you to select the most suitable fund.
  Register for a consultation
  List of branches and consultants

STEP 3

• It is easy to buy and sell fund units in the Internet Bank. You can also make transactions with them at SEB branches.
• If you are planning to invest in funds on a regular basis, you can set up a standing payment order of fund saving in the Internet Bank

What is a securities account?

Securities account
You must have a securities account if you want to acquire securities and fund units, and make transactions with them. You can open an ECSD as well as an internal securities account in SEB. You can open an account in the Internet Bank or at SEB branches.

You can use your ECSD securities account for securities settled in the Estonian Central Securities Depository, such as transactions with Estonian, Latvian and Lithuanian securities. You need an ECSD securities account if you want to acquire the units of voluntary pension funds managed by SEB Varahaldus.
 

You can use an internal securities account for safekeeping and carrying out transactions with securities not settled in the ECSD (e.g. foreign securities, units of funds managed by SEB Varahaldus and funds registered in SEB Asset Management Luxembourg and SEB Guarantee Fund 80).
 

What is an investment fund and who is it suitable for?

Investment fund is a portfolio of joint investments formed using the money collected from investors, which is managed for the purpose of earning income for investors by investing in various securities, deposits and other financial instruments. The format of investment funds may differ in different countries, e.g. common investment funds and funds established as public limited companies are recognised in Estonia.

Your share in the fund is evidenced by the fund units or shares issued to you.

Money, which is raised from selling fund units to clients, is used to form an investment portfolio spread between a large number of different financial instruments. A well spread investment portfolio helps to reduce the risks associated with individual instruments. Acquisition of fund units gives clients the opportunity to access various global markets, where investing independently would be expensive and often also complicated, by making just one purchase.

A fund can earn income in several different ways, such as the increase in the value of the investments in its portfolio as well as a result of receipt of the payouts made on investments, such as dividends and interest. Income like this is usually expressed as an increase in the net asset value of fund units. Any specific investor can earn from a fund if the redemption price of a unit exceeds the acquisition cost of the same unit. In some cases, the income earned by a fund is distributed to investors as payouts from the fund. Payouts are generally made in cash, but in some cases they made be made by way of issuing additional units.

Who is suitable for an investment fund?

Managing a securities portfolio requires extensive investment knowledge and a lot of times. Most people who are interested in investing don’t have enough time or knowledge, which is why it’s best to trust investment specialists to look after your money. Assets in funds are managed by specialists – fund managers and the team of analysts that supports them. Professionals look after the investments you made.

It is also important to note that a fund investment involves investment risks and investors must carefully read the fund’s public offer prospectus, key information or simplified prospectus, rules, annual and semi-annual reports and other data and documents published about the fund at the address www.seb.ee/fondid before they purchase fund units.

Why should I invest in funds?

You can invest either small or large amounts
You don’t need large amounts of money to buy fund units and you can make one-off investments as well as invest regularly. You can start making regular investments from 10 euros. No minimum amount is usually established for one-off investments.

Better risk-spreading
Risk-spreading is very important when investments are made. Investors can acquire a share of all of the securities in the portfolio for the amount they invest in the fund. This spreads the risk and allows the investor to earn income from the development on various markets.

However, you should always keep in mind that investing always involves risk even if you invest in a fund and these risks being materialised may decrease the initial value of the fund considerably.

The money of investment funds is invested by professionals
You have to be an experienced professional to select securities suitable for investment and to carry out complicated analyses. The assets of investment funds are managed by qualified and experienced specialists. Managing your money and looking for the best investment opportunities is their job.

It is easy to monitor the value of your investment
Monthly and quarterly overviews of the instruments belonging to the funds are available on the SEB website www.seb.ee/fondikursid. There are overviews of the perfomance of in the Internet Bank that show clients the funds in which they hold units. Price information and rates of return are published on the SEB website www.seb.ee/fondikursid and in the Äripäev newspaper.

You can sell your units at any time
You can quickly sell your units in investment funds if you need money. The money is usually received in the investor’s current account on the third banking day after the instruction to sell has been processed.

However, make sure you read the rules and prospectus of the specific fund and the document ‘Special Features of Offers of SEB Funds in Estonia’ very carefully before you make your investment decision, as you need to be aware of the various aspects of the issue and redemption of units in such funds and the bases on which redemption may be postponed or suspended.

What funds does SEB offer?

SEB offers investors the opportunity to invest in twelve funds managed by SEB Varahaldus, including second and third pillar pension funds. We also offer a selection of SEB funds managed by SEB Asset Management and Barclays Capital. The funds we offer cover all of the most important global securities markets. We are also offering our clients a new solution: the option to invest in alternative funds, which also invest in currencies and commodities in addition to the usual bonds and equities.

Our funds and intermediated funds
SEB Varahaldus offers its own funds as well as funds managed by SEB’s other management companies and partners.

AS SEB Varahaldus currently manages 12 common investment funds, including six pension funds, two equity funds, three funds of funds, one bond fund. There are 33 funds of the SEB Group on offer.

What is fund saving?

Regular saving or fund saving means investing certain amounts in an investment funds at a certain frequency. The smallest amount is 10 euros per payment, but the frequency can be freely selected. It is basically a standing order for purchasing fund units.

An investment fund as a well spread investment portfolio helps to reduce the risks related to single securities, but the securities market can also be hit by an overall fall, where the price of almost every security traded on the market goes down.

Investing regularly helps to reduce the risk of investing at the so-called wrong time’ (i.e. immediately before the start of a fall). Investing regularly you invest evenly when securities markets rise or fall. Even if you start saving regularly (i.e. in a manner that spreads the risks) right before the securities markets fall, you will earn profits when the fall is replaced with a rise more quickly than you would with a one-off investment.

Saving money in funds by way of fund saving is the best option for saving, as transactions have no additional fee.