What are investment funds?
Investment funds are segregated estates formed with money from individuals and legal entities, called unitholders, for investment in various types of assets. These funds are managed by companies that specialize in this activity.
What is a segregated estate (patrimonio autónomo)?
A segregated estate is a set of rights and obligations that is separate and independent from the company that manages it.
The fund’s transactions are carried out by the management company in the name of the fund, which is the holder of the instruments that represent the investments made and of the assets acquired. For all legal purposes, the fund is treated as if it were a legal entity, and the management company acts as its legal representative.
What is a fund management company?
Funds are managed by corporations (sociedades anónimas) with an exclusive corporate purpose, whose equity is different and separate from that of each fund.
The Management Company implements the investment policy that the fund pursues and makes the investments in accordance with the fund’s purpose, for the benefit of the fund’s unitholders, for the account and at the risk of the unitholders or contributors.
The Management Company must have specialized staff who are responsible for selecting the securities, property and other assets that will form part of the investment portfolio of the managed funds, and for deciding when those investments will be traded.
Who supervises fund management companies?
The management of funds is regulated by Law 7.572/25, and its control and supervision are the responsibility of the Securities Superintendency (Superintendencia de Valores, SIV) of the Central Bank of Paraguay (Banco Central del Paraguay, BCP), which performs its function with rule-making, regulatory, supervisory and sanctioning powers and authority.
Management companies and funds must register in the Registry kept by the SIV. They are governed by the laws mentioned above and by the regulations issued by the SIV, as well as by the fund bylaws that apply to each Fund, as the case may be.
How does one become a unitholder?
A unitholder is an investor in a fund who holds rights over units of that fund.
A person becomes a unitholder when the management company receives the investor’s contribution, which must be made in cash.
What is a participation unit?
The contributions that investors make are converted into participation units, or units (cuotapartes). Each unit represents one of the equal aliquot parts, with similar characteristics, into which the net assets of a fund are divided. In other words, it represents the part of the fund’s total net assets that corresponds to each unitholder.
How is a Fund’s portfolio made up?
A Fund’s portfolio is made up of the different assets that are acquired with the unitholders’ money in accordance with the investment objective and policy set out in the Fund Bylaws.
With the unitholders’ money, the Management Company buys for the portfolio the assets that match the Fund’s investment objective, for example: cattle, shares, real estate rights, savings certificates of deposit (CDA) and bonds, among others.
The assets in the Fund’s portfolio always belong to the unitholders, in proportion to the money they contributed when they bought participation units.
What is the purpose of a Fund’s Subscription Agreement and Fund Bylaws?
On the first purchase of participation units in a Fund, a Subscription Agreement is signed with the Management Company and, at the same time, the Fund Bylaws are received as a supplement to that agreement.
In addition to the Fund’s investment objective and policies, the Fund Bylaws specify all of its characteristics, such as the basic structure of its portfolio, the fees to be charged by the Management Company and all allowable costs and expenses, among others.
What information does a Fund unitholder receive?
Each Fund unitholder has access to a periodic report that contains the portfolio composition and the performance of the investments, as well as the fees, costs and expenses incurred by the Fund. The Management Company also includes any other information that it considers appropriate to bring to the attention of the unitholders, and any information that the Securities Superintendency of the BCP requires.