Leaving your money sitting idle in an account means losing purchasing power to inflation. Here, we explain what a mutual fund is, how it works behind the scenes, what types exist based on your risk tolerance, and what to check before putting in a single peso.

Download the belo app and check out how to make your balance grow based on your account and current terms.

How a mutual fund works behind the scenes

Every day your money sits idle in an account, inflation chips away at its purchasing power.

This silent loss pushes many people to look for instruments that put their pesos to work, and mutual funds emerge as one of the most accessible options in the Argentine market.

A mutual fund (FCI, for its Spanish acronym) is a vehicle that pools capital from many investors to allocate it to an asset portfolio managed by professionals.

You pool your money alongside thousands of people, a management company decides what to invest it in (bonds, stocks, time deposits, Treasury bills), and each investor receives shares proportional to their contribution.

The CNV (National Securities Commission) regulates these instruments and oversees both the management company and the depository company that custodies the assets.

The share is the unit of measurement of your participation. Your profit or loss depends on how the value of that share changes over time.

This variation directly reflects the performance of the assets that make up the fund's portfolio, and it is the core mechanism that defines the risk of any mutual fund.

Types of mutual funds and their risk

Not all funds behave the same way because they don't all invest in the same things. Types of mutual funds are grouped primarily by the asset class they prioritize, and that composition determines both volatility and liquidity.

A money market mutual fund invests in very short-term instruments, such as fixed-term deposits and interest-bearing accounts. Its share value tends to grow steadily day by day without surprises, and liquidity is immediate or within 24 hours.

It is a common choice for those who need to have their money available quickly and want those pesos to earn some yield in the meantime without being exposed to a downturn.

On the other extreme are equity funds, which allocate part or all of their assets to stocks, where the share value can rise or drop sharply in a short period of time.

That level of risk makes sense when the investment horizon is long—years rather than months—and the investor can tolerate seeing their capital fluctuate without needing to redeem it in the short term.

Between both extremes, there are fixed-income funds and balanced funds that combine bonds with some exposure to equities.

Comparison of fund types by risk profile

What to read before putting a peso into a fund

The difference between choosing a mutual fund well or poorly often lies in the documents that few people read. The prospectus and fact sheet of each fund contain three pieces of information that directly impact your experience.

The three key pieces of information in a fund's prospectus

• The redemption settlement period indicates how long it takes to get your money back once you request a withdrawal. In a money market fund, it is usually 0 to 24 hours; in a fixed-income fund, it can be 24 to 72 business hours; and in an equity fund, it can stretch to 72 hours or more.
  
  That detail completely changes the equation if you need access to your money urgently.

• The management fee can represent between 1% and 3% annually depending on the type of fund, and in some cases, an entry or exit fee is added. It's best to compare the net return published on the fact sheet so you don't confuse an attractive gross result with what you will actually receive.

• The portfolio composition shows exactly what your money is invested in. Reviewing it gives you a real sense of the risk you are taking on, beyond the fund's commercial label. A fund that claims to be "conservative" but holds 20% in small-cap stocks will not behave as you expect.

Other ways to make your money work

Mutual funds are a useful tool, but not the only one. For those who prefer not to pick funds, read prospectuses, or calculate redemption periods, there is the option to let money earn returns simply by being deposited.

At belo, we offer the option for your balance to generate returns automatically, without having to subscribe to any instrument or make manual transactions.

You can choose how much you want to set aside, in which currency, and how often, and the process runs on its own with your automated savings enabled.

This yield is variable, meaning there is no guaranteed fixed percentage, and the return can change from month to month depending on market conditions.

The practical advantage is that it requires neither technical knowledge nor active monitoring. For someone who wants their money to keep moving but lacks the time or interest to analyze types of mutual funds, this solution covers that basic need through a digital wallet that manages the process for you.

Both in a mutual fund and in any variable-yield alternative, future results are never guaranteed, and this transparency is what enables informed decisions.

Download the belo app and check the current conditions for your account.

Frequently asked questions about what a mutual fund is and how it works

How much minimum money do I need to invest in a mutual fund?

The minimum amount varies depending on each fund and the platform you use to trade, but many mutual funds in Argentina allow you to start with very low amounts, even from a few thousand pesos.

The most practical approach is to check the fact sheet of the specific fund you're interested in, where this figure is always listed.

Can I lose money in a money market fund?

The probability is very low because it invests in very short-term instruments with high stability, but technically no fund guarantees that its share value cannot drop.

Money market funds are designed to preserve capital with modest and sustained daily growth, although that does not equate to a formal guarantee.

What is the difference between the gross and net return of a mutual fund?

The gross return is what the asset portfolio generates before deducting fund fees. The net return is what actually remains for the investor after those deductions.

It's advisable to compare funds using the net figure, as fees can vary considerably from one to another.

How are mutual fund gains taxed in Argentina?

The tax treatment depends on the type of assets comprising the fund and the investor's profile. Resident individuals benefit from exemptions on certain local fixed-income instruments.

The best course of action is to consult an accountant to understand the exact impact on your specific situation.

Can I hold more than one mutual fund at the same time?

Yes, you can subscribe to multiple funds simultaneously, allowing you to diversify by asset class, timeframe, and risk level.

Many investors pair a money market fund for short-term cash with a higher-risk fund for a longer horizon.