Czechs are becoming more interested in investing in real estate, but few of them have enough money to buy their own investment apartment. So, we decided to look at the INVESTIKA fund, which is one of the biggest and most well-known real estate funds in the Czech Republic. On the side, we will also talk about some other investments and other funds from Investika.
Review INVESTIKA in a nutshell
INVESTIKA is a Czech investment company that has a license from the Central Bank of the Czech Republic (CNB) to run mutual funds that mostly invest in the real estate market. Since 2015, the business has been open, and almost 50,000 people use its investment products.
Investika manages 4 investment funds. The INVESTIKA real estate fund is the oldest and least well-known. Even small investors can put money into it. The smallest amount you can put in is just one crown, and the average annual return on the fund is about 5%.
The offer also includes the DYNAMIKA fund, which invests in development projects, the ECONOMY fund, which invests in areas other than real estate, and 3 sub-funds of the Broker Consulting SICAV investment fund (BOND, ETF, and OPPORTUNITY). The DYNAMIC, ECONOMIC, and OPPORTUNITY funds are for investors with at least 1 million crowns to invest.
Advantages:
- Czech company with CNB license
- Relatively stable returns for real estate funds
- One-off and regular investments from CZK 1
- Investment in quality commercial real estate
Disadvantages:
- The investment takes place through an intermediary
- Higher fees
- Funds operate for a short time, so we don’t know the long-term performance
INVESTIKA – Basic Information
INVESTMENT is an investment company based in Prague, Czech Republic, established in 2015, with permission to operate from CNB. They offer investment products focused on real estate and securities with an optional investment horizon (5 years recommended). The minimal investment is 1 CZK / 0.10 EUR, and the investment currency is CZK and EUR.
They accept payment through bank transfer, and they offer 4 funds under management with a historic yield of 5% per annum (Investika fund). They don’t offer to create your own portfolio, and the entry fee is up to 4.00% (Investika fund), while the administration fee is 1.70% per annum (Investika fund), and additional charges may apply.
Products and Services
Investika runs 4 investment funds that you can use to put money into commercial real estate, development projects, securities, or both.
The suggested time frame for investment is five years, but units can be sold even sooner.
Share certificates are bought and sold with the help of an investment intermediary. If you contact customer service, Investika will send you a list of intermediaries.
Do you want to use a bonus of CZK 500 to start investing in real estate? Just sign up for an account with RONDA INVEST and put 10,000 crowns in it. The bonus amount will be added to your first monthly payment.
FUND INVESTIKA
The real estate fund INVESTIKA, which has been running since 2015, is the most important part of the whole package. The goal of the fund is to buy good commercial property and make money from renting it out. Not just in the Czech Republic, but also in other countries.
INVESTIKA is a mutual fund that is open to all investors, even small ones. The advantage is that you only have to put in 1 CZK, which is about $0.10, to start.
DYNAMICS AND ECONOMY FUNDS
DYNAMIKA and ECONOMICA are funds of qualified investors that are only for investors who are more flexible and have more experience with investing. The least you can put in is 1 million crowns (or 100,000 CZK if your investments in other Investiky funds exceed one million crowns).
The DYNAMIKA fund was started in 2018, and its main focus is on projects that help people. Since 2019, the EKONOMIKA fund has been running. Its strategy is to give loans or loans or to invest in bonds or bills.
OK SMART CASHES
Broker Consulting SICAV is the fourth fund in the offer. It is split into three sub-funds:
- OK Smart Bond is a fund for conservative investors that invests in corporate, government, and other types of bonds. The goal is to get a return above inflation with as little risk as possible. The least you can put in is 500 crowns.
- OK SMART ETF is a growth fund for investors who are willing to take more risks. It mostly invests in stock ETFs. Bond funds and money market funds also make up a small part of investments. The least you can put down is 500 crowns.
- OK The fund’s plan is to either give out loans or invest in securities. Since this is an FKI, you need at least 1 million crowns to invest.
Fund performance
The table below shows how different funds have done over the past three years. Unit prices are used to figure out performance, so administrative and management fees are already included:
Since the EKONOMIKA, OK SMART BOND, and OK SMART OPPORTUNITY funds haven’t been around for three years, we can only look at how they’ve done in the last two years:
Results from 2 or 3 years don’t tell us much about how well something will do in the long run. Maybe it’s because the coronavirus recession, which brought down stock markets by tens of percent in the spring of 2020, had almost no effect on how well real estate funds did.
An equity fund (ETF) is likely to have the best long-term performance, but investors should also expect it to be more volatile.
YIELD VERSUS INFLATION
Real estate funds are a great way to protect money from inflation when things are normal. But the current rate of inflation is much higher than what real estate funds want to earn. To give you an idea, the Czech Banking Association thinks that the average inflation rate in 2022 will be around 7.5%. But when you take out all the costs, real estate funds only give you about 4%.
Shares do better in the long run than real estate because they don’t have any operating costs. But because the stock market is so volatile, investors take on more risk.
Through the platforms of brokerage firms, you can buy single shares. But most investors will do better with stock funds that are run by experts. Mutual funds, on the other hand, have high fees, which we’ve already talked about. ETF funds are much cheaper because you can buy their units (shares) right on the stock exchange.
Exchange-traded funds, which are also called ETFs, are investment funds that are traded on the stock market. Each fund is made up of tens to hundreds of stocks, so when you buy one fund, you are investing in a whole market segment.
Index funds, like the S&P 500 or DAX, that track stock indexes are very popular. Long-term, their returns are between 8% and 10% per year, which is better than most actively managed funds. But there are also exchange-traded funds (ETFs) that focus on the real estate market (REIT ETFs).
For example, you can buy ETFs through the trading platforms of some brokers, like XTB or Degiro.
You can use investment platforms like Portu or Fondee if you find trading platforms hard to understand or don’t know how to choose the best ETF. For a small fee, they will recommend an ETF fund portfolio and buy the securities for you.
Fees at INVESTIKA
Mutual funds usually have high fees, and Investika’s funds are no different in this regard. We should point out, though, that the fees are clear and easy to understand, so investors know how much they will pay and when the company will lower its fees.
Investing has four main fees:
- Entry fee: A one-time fee you pay when you buy units.
- Exit fee: A one-time fee paid when you sell units. The fee is based on how much the securities sold were worth.
- Management fee: The cost of running the fund each year. The fee is based on how much money is in the fund and is basically a reward for the managers.
- Administration fee: A fee paid once a year to cover the costs of running a business (eg costs related to trading on the stock exchange). The fee is based on how much money is in the fund.
PREPAID FEES
We will look at the INVESTIKA fund’s entry fee in a little more depth.
The basic entrance fee rate is 4%, but if certain conditions are met, the company will lower the fee. The first choice is to put down a lot of money. The fee is “only” 3% for investments over CZK 100,000.
The second choice is to pay fees ahead of time. This means that you choose a time frame for your investment and pay the entry fees for that time frame ahead of time. In this case, the entrance fee rate is between 2.10 and 3.50 percent.
Prepaid fees may seem like a good idea, but they may not save you a dime. You use money that you could have invested to pay the fees. In this way, you are giving up some of the money you could have made. Also, if you pull out of the investment too soon, you’re throwing away the money you paid in fees. So don’t let a lower rate tempt you; instead, figure out which option is better for you.
Experience with INVESTIKA
We’ve talked about fees and returns, but there are still two important questions we haven’t answered:
Is Investika a project you can trust? And how do the funds compare to the other ones?
The Czech company INVESTIKA, which invests in solenoid, a.s., which has been in business since 2015, is in charge of managing the funds. The company has a license from the CNB, which means it is allowed to manage and run investment funds and offer investment services. Also, the fund’s assets are kept separate from the investment company’s assets, so that if the company goes bankrupt, it won’t affect the value of the fund.
Since investment funds are open, it is easy to find out what properties they own and who they rent them to.
So far, the INVESTIKA fund has given back about 5% per year, which is more than the average for retail real estate funds. Some real estate funds do better than others, but most of them are run by professional investors and require a deposit of millions of dollars.
Final summary
The INVESTIKA real estate fund is perfect for people who want to invest in commercial real estate through a fund managed by a reliable and stable company.
The fund has had stable returns of about 5% per year over its 7-year history, which is above average for real estate mutual funds. We don’t recommend investing in the short term, though, because the entry fee is higher. If you only put money into the fund for a year, the entry fee will take up almost all of your profits.
The INVESTIKA fund is one of the best in its class for small investors. There are, however, other products that let you invest in real estate more easily and for less money. We can give examples of Investown, Ronda Invest, and Upvest as Czech investment platforms. These have similar returns right now, but there is no cost to join. Also, with them, you don’t have to go through a middleman to buy or sell. Instead, you do it all through the service’s website.
Do you want to use a bonus of CZK 500 to start investing in real estate? Just sign up for an account with RONDA INVEST and put 10,000 crowns in it. The bonus amount will be added to your first monthly payment.
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