First, let’s clarify what an investment fund is and how it works. In short, it’s a way for several investors to pool their money to invest in different financial instruments, with the profits from those investments shared proportionally among investors based on each one’s holding. 

Now that we’ve settled the most important point, we thought it would help if the rest came straight from a specialist: Aurel Bernat, CEO BT Asset Management. 

What are the first steps to buy fund units?

As with any undertaking, the first step is determination — the desire to save, ideally on a regular basis. If that’s there, you can open an investment account, for example at any Banca Transilvania branch in the country.

What documents are needed? Can I submit them online?

Investment accounts with BT Asset Management are opened based on an ID card or passport for individuals, and a company’s legal documents for legal entities. Given investor identification requirements, opening the investment account is done in person at any Banca Transilvania location; after that, any subsequent operation can also be carried out online. We plan to introduce fully online investment account opening.

What are the fees?

When it comes to buying mutual funds, Romania is among the few European countries where this is generally free. At BT Asset Management, for example, investing in any of our funds is free. Every mutual fund charges a management fee, which can range from just over 0%/year to around 2-3%/year, depending on the fund. Fixed income funds (bonds, government securities) have modest management fees, while equity funds are toward the upper end of that range. Some funds may have early redemption fees, so it’s wise to think long term — generally over 1 year from the date of investment — to avoid redemption charges. All managers are required to disclose fees transparently at the time of investment, so the information is not only public, but clearly highlighted.

What does a recurring investment involve, in terms of the steps required?

Setting up a recurring investment simply means telling BT staff you’d like one. Once the service is set, amounts are invested automatically, at no cost, on the date you specify. You just need to make sure the money is in your account on that date. If it isn’t, the investment won’t go through and the system will try again the following month. Recurring investing is simple, convenient and fully controlled by the investor.

A few tips for new investors:

The best advice is about peace of mind: be comfortable with your own decisions. There are two ways to invest:

(1) Recurring — a way to build a habit, a long-term reflex. For this to work, the amounts you invest shouldn’t put pressure on your monthly budget. Good habits form over time.

(2) Occasional investments, on the other hand — made with amounts accumulated over time and deployed in full at a given moment — should follow the idea “buy low and sell high.” Choose and wait for the right moment to invest, and think long term.

Which was the best-performing fund in BT Asset Management’s portfolio in 2020? And over the past 3 years?

In 2020, the best-performing fund under our management (and, to our delight, in the local funds market) was BT Energy, with a double-digit return (+17.4%). Over the last 3 years, the BT Index Romania ROTX fund delivered a performance of more than +44%, including 2020. We can see that the long term smooths out short-term negative moves, and equity funds have been the winners in recent years. Actively invested capital that sets the local or global economy in motion is what allows attractive performance to be achieved.

One more tip to close 😊:

Even if a mutual fund can be a good idea at the right time, remember that a fund’s past performance is not a guarantee of future results. So before you invest, make sure you do your homework. And if you need a bit of help, the team at BT Asset Management is there for you, whatever your question 😉.