The difference between direct and portfolio investment. What is the difference between direct investments and portfolio investments and what are their benefits? Comparative characteristics of direct and portfolio investments table

Investments are “infusions” of resources into the development of enterprises in order to obtain a certain percentage of profit from their core activities. Allocate investments of direct and portfolio types.

basic information

What is "direct investment"? Any investor has come across this concept, but not everyone understands its essence.

"Direct" are capital investments in which the investor becomes the owner of at least 10% of the authorized capital of the company or buys a controlling stake (51%). Thus, by investing money, you can enter into the management of a ready-made (fully formed) business.

Direct investments are divided into two large groups:

in the share capital of foreign companies (the so-called "foreign investment");
into the country's economy.

Direct investments used by large corporations to establish their branches outside the country in which they are located Main office. Very often, the creation of branches occurs through the absorption of a similar, already existing business. It is enough for an investor to acquire a controlling stake and obtain the right to manage the company.

Large monopolies are interested in buying shares of small firms that are engaged in similar activities.

There are countries where competition in some areas of production is too strong, for example, in China there are a lot of small tablet assembly companies.

If there is an investor who wants to assemble tablets in China, then it would be advisable to acquire controlling stakes in already functioning companies.

Direct investment is aimed at working in the long term, so it is often called "strategic investment".

Receipt structure foreign investment by type

Sometimes, for direct investment, special funds are created that accumulate large amounts of capital in order to further “capture” the monopoly in the market. Such funds have been operating for at least 10 years. After the fund closes, all investors receive a payout equal to their investment plus a percentage of the proceeds from the sale of assets that were resold by the fund.

Novice investors, due to ignorance or unwillingness to spend a lot of effort and time, use portfolio investment.

portfolio investment is a passive investment of money with the aim of obtaining short-term and instant benefits. Portfolio investors are engaged in investments in securities, bonds or stocks of different companies, which form an investment portfolio or valuable papers hence the name "portfolio investment".

In fact, such investors acquire a part of the company without any interference in its activities.

Portfolio investments do not provide for the management of the company by investors.

However, there can sometimes be exceptions, for example, when the company is too large and its shares are divided among many small investors. The management of such a company is carried out by an association of investors or the largest of them.

Portfolio investment has some advantages over direct investment.

On the one hand, it is beneficial for the company itself, since its shares are owned by a large number of investors, and the controlling stake is in the hands of one investor.

On the other hand, the portfolio investor also receives certain benefits, because he does not have to take on the responsibility of managing the company.

The second positive aspect of portfolio investment is the minimal risk of losing money. The investor's funds are diversified (distributed) into many parts and invested in the statutory capital of several companies.

Portfolio investments consist of liabilities and assets of the company. Operations with the purchase of assets include trading in securities (stocks, certificates, bonds) of large foreign firms.

Financial liabilities can be government loans in the form of cash held by the investor.

Direct and portfolio foreign investments have a certain structure. Direct investment consists of four main categories:

investments in fixed assets (new);
creation of fixed assets (PF) through joint investment;
investments in the modernization of the OF;
investment in order to acquire 51% of the shares.

Portfolio investments consist of investments in securities and loans to enterprises or the state.

According to experts in the field of investment, today direct investment is one of the most developing types of earnings. Direct investments, although more risky than portfolio ones, however, they bring much more profit.

The difference between direct and portfolio investment

The fundamental difference between direct and portfolio investments is their ability to influence the company's activities.

The division of investments into two groups (direct and portfolio) is, of course, a convention.

Direct investments allow you to manage activities, portfolio investments do not.

Sometimes even 10% of the authorized capital is enough for management large enterprise(remember the example above, when a corporation is divided among many small investors).

Portfolio investment in the status capital of the company allows you to have a stable passive income, in fact, without interfering in the activities of the company. and planning strategies, as well as the calculation of return on investment.

Read about investing in gold. Has gold lost relevance in our time?

No one can guarantee quick returns on investments, so when you invest under high percent, the risk of losing capital is high and not welcomed by many experienced investors. Here is everything about this type of investment and advice to the investor.

Who can invest?

Invest in direct or portfolio investment may individuals and legal entities that use their own or borrowed monetary resources.

In deciding on the type of investment, an important role is played by the availability of own funds and the goal pursued by the investor.

For example, if funds are invested to preserve capital and increase it, then portfolio investments are used.

In addition, small investors also prefer portfolio deposits.

If the task of the investor is to obtain the right to manage the business, then you should choose the direct type of investment.

Before making a decision regarding the choice of the type of investment, it is necessary to analyze the effectiveness of investments.

Buying a property is a type of long-term investment that has both pros and cons. attract many people because of the stability of the economic climate in the country. Read about some of the features of the German real estate market.

Read about investing in the American stock market.

What is direct and portfolio investment?

A direct investor develops a selected enterprise, a portfolio investor buys shares of already successful companies.

Article navigation

Definition of direct and portfolio investments
How are direct and portfolio foreign investments similar?
How is direct investment different from portfolio investment?
Purpose of participation in investment: direct, portfolio and other investments
Direct and indirect investments: essence, forms and principles
Is private equity different from venture capital?

It is well known that the classification of investments has a complex and branched structure. Profitable financial investments differ in many ways. This article will talk about the similarities and differences between direct and portfolio investment.

Definition of direct and portfolio investments

Direct investment is the financing of the creation (creation or reproduction) of fixed assets of a particular enterprise. A typical situation for this type of investment: a firm needs money to buy equipment that can strategically solve the problem of increasing profitability. The company's management approaches a person (natural or legal) with a proposal for financial participation. A business plan is demonstrated, which describes the investor's benefits from the investment with a detailed schedule for the development of the requested funds. Conditions of control and cooperation are negotiated.

Portfolio investment is a cash injection into the turnover of an enterprise in order to increase its financial assets. About Achieving Control economic activity in this case it is not. The investor is interested in the rate of return, that is, the rate of return attributable to the invested monetary unit or one share.

The similarity is manifested primarily in the purpose of each investment - the most efficient use of available funds. All profitable investments, both domestic and foreign, are subject to this rule.

Foreign portfolio investments testify to the general trust in the recipient country. Since relatively small shares of a block of shares do not make it possible to interfere in the management of the enterprise, the financier, by acquiring them, hopes for the stability and reliability of his investment. In general, capital inflows are good for the national economy and confirm a good investment climate.

The same considerations apply to direct investment. A foreigner who buys shares in an enterprise needs to experience the minimum acceptable degree of confidence that his funds are protected by the state, and the legislation is stable. Otherwise, the acquisition may turn into losses, even if the investor is actively involved in the management of the facility and has the necessary skills for this.

In some cases, the similarity criterion may be the method of purchasing assets (production or financial). This can be done directly with the issuer of securities or indirectly through stock exchange or secondary market from a third party. At the same time, it is not the place where the sale of shares is carried out that matters, but the purpose of this operation. If the financier wants to get the right of managerial control, he buys the enterprise "in parts" from different holders.

A portfolio investor does not care at all from whom to buy shares - he is only interested in their economic performance.

Commonality is also observed in the nature of a specific commodity, which is securities. Whether they are part of a portfolio or part of a direct investment, they can be speculated or realized under certain circumstances.

How is direct investment different from portfolio investment?

First of all, direct investments differ from portfolio ones by the nature of the assets for the development of which they are spent. The shares included in the portfolios were purchased with funds that the recipient disposes of at its own discretion as financial instrument. Direct investment involves strictly targeted use (acquisition of fixed assets, their renewal, modernization, construction, etc.).

Another difference is the amount. The content of the portfolio is formed by several types and types of securities. Such a structure is appropriate for diversification, but is completely unsuitable for a capture (absorption) strategy. In other words, it is difficult to concentrate not only a controlling stake, but also a tenth of the total capital of an individual enterprise in one portfolio.

The third significant difference is in terms of investment. Shares in the portfolio can be quite long, but can be sold at any time if they cease to provide financial returns. There are other considerations for selling, in particular, speculative ones.

Direct investment is calculated as a long-term investment (at least five years). The reason for such a long cycle lies in the very nature of the operation. This investment, by definition, aims to develop production capacity and subsequent payback. It makes little sense to get rid of securities before reaching the zero point (beginning to make a profit).

In Russia, the differences between portfolio and direct investment are clearly demonstrated by the prevalence of the latter. In conditions domestic economy attitude towards impersonal securities is cautious, especially against the backdrop of low development stock market.

In the US, a significant part of the population is involved in stock exchange transactions. Ordinary citizens buy shares, form their own portfolios (on their own or using the services financial advisors), that is, they act as investors. Russians do not trust securities. And the enterprises themselves (especially successful ones) prefer to find other sources of third-party capital, fearing the consequences of an uncontrolled issue of shares.

In the Russian Federation, direct investments are still practiced, when the financier knows who the cash flow will go to and what it will be spent on. It is likely that over time this proportion will change and the Russians, like the Americans, will invest their savings in the development of the domestic economy.

Purpose of participation in investment: direct, portfolio and other investments

Obviously, the motivations of direct and portfolio investors are different. Understanding the motives is easier if you take into account the classification of financial investments.

Real investments are called if they are aimed at the development of specific assets, that is, fixed assets. They are expressed as capital investments. Naturally, most of them are direct.

Financial investments consist of investments in instruments for generating income. Implementing them, the investor does not go into subtleties economic mechanism issuing company. He will be satisfied if the ruble invested in a certain company receives an acceptable amount of dividends for him. It was this situation that was described by the American writer Theodore Dreiser: small exchange traders watched from which foot they stepped on the asphalt, leaving the car of the financial bigwig. If it is on the left, then today it is “bearing”, that is, it is selling. Such was their sign. Investors-financiers do not think about how the invested enterprises work.

It can be concluded that a direct investor seeks income by developing a particular enterprise and increasing its value. Ideally, he absorbs the growing firm and gets the lion's share of its profits. His portfolio colleague goes to the same goal in a different way - he buys the most profitable or promising securities.

The length of the investment cycle also serves as a classification criterion. Investments of two years or less are considered short-term. The average time is two to three. All other investments are long-term. The cycle time demonstrates the investor's intentions - to make money quickly or to develop the object for a long time.

According to the form of ownership, investments are divided into:

private;
state;
internal;
foreign;
joint.

Each of the subjects pursues its own goals.

The state, allocating funding for a project, takes into account its social or other importance (for example, general economic or even defense).

The task of a private investor is profit, but not everything is simple here either. Sometimes a separate business entity seeks to establish a monopoly position or control entire sectors of the national economy. In some cases, investments are subject to legislative restrictions related to the fight against monopolies and state economic security.

Foreign investors who take capital out of their country pursue a variety of goals. Some are looking for the most favorable conditions for business (cheap labor resources, energy, raw materials, close markets, etc.). Others want to diversify revenue across currencies. Still others "indicate a presence" in regional markets, demonstrating the brand with an eye to the future. Forms of such expansion are mutually beneficial joint ventures, branches, foreign representative offices and subsidiaries.

Everything is clear with the sectoral sign: investments can be directed to certain target sectors of the economy ( Agriculture, light, heavy or other industry, IT-technologies, trade, etc.).

The investor's interest in a certain sectoral specialization indicates the potential of the industry, in other words, its underdevelopment.

Another criterion for classifying financial investments is the degree of riskiness. An aggressive portfolio indicates an investor's desire for a high rate of return at the expense of security. Conservatism is manifested in the prevalence of reliable securities, but possible lost profits are sacrificed. Liquidity requirements for shares are dictated by the need to quickly raise funds.

Summarizing the above directions of investments, we can conclude that the main goal of portfolio investments is to extract speculative income. Direct investments are aimed at the development of the real sector of the economy.

Direct and indirect investments: essence, forms and principles

indirect financial investments called direct or portfolio investment in the form of securities purchased from intermediaries.

Specialized funds, mutual funds, brokerage and insurance structures, banks and financial advisory organizations act as a "transmission link".

These intermediary enterprises acquire stakes in different firms and then sell them to interested parties. Securities are included in ready-made optimized portfolios that take into account individual requirements.

Indirect investments are also called indirect or mediated. Their share should not exceed a tenth of the company's capital. Otherwise, such a block of shares can be used to seize control over the enterprise, which is typical for a direct investment.

For a long time the loan was the main way of investment. Probably the simplest way to invest in the barter era (before the invention of money by mankind) was “selfish charity”. A successful food producer could feed strong people who were starving due to temporary difficulties (weather, military). Later, the survivor became their farmhand or helped in difficult times.

During the Renaissance, Florentine Medici merchants, tired of trade, became "changers", investing in real estate under construction and young enterprises. Even at that time, it became "fashionable" to buy monopolies - securities that allow you to engage in any industry without the interference of competitors.

Today's market consists of millions of trades per day. Thousands of businesses are created and go bankrupt every day. The shares of many of them, as well as securities of countries and industries, are listed (have a single price) on the stock exchange.

Direct investments

Direct bonds are principally used by the world's leading investors. There are different types of investors. Venture capitalists invest in "startups" - the most fragile companies, consisting of 1-2 entrepreneurs, 0-5 employees and one "super idea". They estimate the likelihood of a company's success "by eye" and take a large part of the company for next to nothing. However, their risk is as high as 90 percent. In other words, nine out of ten startups don't survive. Profitability venture investor shaped by their success of 10% of selected companies.

Portfolio investment

Good investors usually avoid " short positions” (quick bets), minimize losses and analyze the entire market as a whole. The modern financial "ecosystem" is fragile - the fall of one enterprise can "along the chain" cause a crisis in other industries. Sometimes (relationships, relationships of variables) stock quotes are not obvious: in a crisis, the fall of a tire manufacturer can affect acoustic companies (car acoustics).

Financial "bar"

The "barbell principle" advises to keep 80%-90% in the most reliable instruments (money, precious metals, real estate), while 20% -10% should "work to its fullest." The riskiest "low interest" can be placed in yield bonds of developing countries, complex derivatives ( credit instruments) etc.

It is used by many experienced investors, keeping it in cash and government bonds up to 90% of your "budget". A small part of the savings is stored in the riskiest instruments, shares of developing companies and their shares.

Characteristic differences between direct and portfolio investments:

Direct foreign investments

In recent decades, in the system of world economic relations, the movement of direct investment has become increasingly important - capital investments with the aim of acquiring a long-term economic interest in the country of capital investment. The investor in this case provides himself with full control over the object of placement of his capital. Direct investment is almost entirely associated with the export of private entrepreneurial capital, apart from relatively small foreign investment firms owned by the state.

Since the mid-1980s, the growth rate of direct investment in the world economy has been 4 times higher than the growth rate of world GDP, and there are explanations for this. In particular, when using foreign direct investment:

the activity of the private sector is activated;

expanding access to the foreign market;

facilitated access to new technologies and management methods;

the probability of reinvesting profits within the country increases, and not exporting it to the country where the capital is based;

does not increase the external debt of the host country.

Leading positions in both exports and imports of entrepreneurial capital are occupied by industrialized countries, which account for 97-98% of the global volume of foreign direct investment. Among them, 3 centers of world economy stand out: the USA, Western Europe and Japan.

Let us analyze the economic consequences of capital migration, both for exporting countries and for receiving countries. Let, as before, there are two countries in the world - A and B.

Fig.3.

Considering that the main and only cause of the international movement of capital is the different profitability of its investment in different countries, suppose that in country A there is a relative excess of capital with limited investment opportunities due to the lack of, for example, natural resources, scientific and technical potential, etc. Country B, on the contrary, has little capital, but it has significant natural resources.

Suppose that for some reason there is no movement of capital between countries. This situation can be clearly illustrated using a graphical model (Fig. 3). In the model under consideration, country A has capital in the amount of K A, country B - K B ; the total amount of capital in the world economic system is the value: (K A + K B). In the absence of international capital flows, the relatively surplus in country A will be fully invested in national production.

In accordance with the function of the marginal product (marginal productivity) of capital MRA K, the interest rate on capital in country A will be set at the level corresponding to point C, and will be 2% for the example under consideration. As for country B, the relative shortage of capital in the conditions of its limited supply will entail the formation of a higher interest rate corresponding to point D (8%).

The shaded figure below the line MP A K (O A GCM) denotes the value of the national product produced in country A using capital in the amount of K A. At the same time, the profit of the owners of capital is the value corresponding to the area of the rectangle OAFCM, and the area of the triangle FGC corresponds to income owners of other factors of production such as land and labour.

Similarly, the shaded figure below the line MP A K (MONB B) reflects the value of the national product produced in country B using capital in the amount of K B . The profit of the owners of capital is the value corresponding to the area of the MDLO B figure, and the rest (DHL) is the income of the owners of other factors of production.

The entire shaded area of the model under consideration thus characterizes the total value of output in both countries in the absence of the possibility of investing abroad.

Now suppose that all restrictions and prohibitions on international financial flows are completely abolished. There are strong incentives for capital owners in country A and potential borrowers in country B to pool their entrepreneurial skills. Country A's lenders will seek to provide loans to entrepreneurs in country B, where the interest rate is higher. Their competition among themselves will lead to the establishment of a new equilibrium at point E (Fig. 4), where the interest rate will be equal, for example, to 5%. At the same time, the owners of capital in country A invest in the entrepreneurial structures of country B W investments.

As for country B, the inflow of capital into it from country A (in the amount of W) led to a decrease in the profitability of investing capital in country B from 8 to 5%. However, at the same time, due to the investment of both its own capital and borrowed from country A, country B experienced an expansion in national production from (6 + 7 + 8) to (6 + 7 + 8 + 9 + 10 + 4 + 5 ). True, segments (4 + 5 + 10) are a product produced with foreign capital, and it must be given to country A in the form of profits for investors from country A. Thus, the net increase in domestic production in the country will be equivalent to the area of segment 9 Because of the fall in the profitability of investing capital in country B, the income of owners of capital in this country will decrease from (6 + 7) to 6, and the income of owners of other factors of production will increase from 8 to (7 + 8 + 9).

Fig.4.

In country A, the volume of production using the capital left there (K A - W) will correspond to the sum of the areas of figures 1, 2,3. In addition, country A will receive a loan remuneration in the amount corresponding to the area of the rectangle (4+5+10).

Thus, in country A, as a result of a more productive use of capital due to its investment in the economy of country B, the total product produced using the same amount of capital turned out to be greater than the initial one by the value of the segment 1 0. The income of owners of capital increases to a value corresponding to the area of the figure (1+2+4+5+10), while the income of owners of other factors of production decreases to segment 5.

From the point of view of the world economy as a whole, as a result of the movement of capital from country A to country B, total output increased by an amount corresponding to the area of \u200b\u200bthe figure (9 + 10), of which segment 10 belongs to country A, and segment 9 belongs to country B. Country gain A is determined by a more efficient use of the capital of this country as a result of its investment in country B, and the gain of country B is due to an increase in the volume of capital investments in the national economy of this country.

Thus, the international movement of capital, like the international movement of goods, leads to an increase in the volume of total world production due to a more efficient redistribution and use of factors of production.

Note that the structure of benefits and losses here turns out to be identical to the structure of benefits and losses established by us in the analysis of international trade and labor migration: the removal of barriers benefits the world economy as a whole and those groups for which freedom means additional opportunities, but harms groups for whom freedom means tougher competition. However, this does not exhaust the significance of capital migration, both for exporting countries and for importing countries.

In addition to the direct effect, there is also a secondary (indirect) effect, which manifests itself in the development of related industries. The size of this effect, in accordance with the theory of the multiplier of J. Keynes, can exceed the size of the direct direct effect by several times.

IN At the same time, by importing capital, the country has to solve many difficult problems of its effective use. The efficiency of its use is very closely related to the structure and specialization of production, the state of financial markets, the level of competition, the position in the social sphere, the movement of the exchange rate national currency etc.

Depending on certain conditions, the import of capital can be either an effective form of international cooperation or a factor in the aggravation of acute economic contradictions between states, especially those that are at different stages of economic development.

The graphical model of the international movement of capital discussed above can also be used to analyze the consequences of a more complex variant of capital migration - migration under the conditions of its taxation.

If the country's financial power is large enough to influence the rate of interest international market capital, this power can and will certainly be used in its interests. It is this situation that is presented on the graphical model (Fig. 5).

Fig.5.

Let country A introduce a tax of 2% per annum on the volume (value) of the assets of its residents exported abroad. This will push up the interest rate that foreign borrowers will have to pay and lower the rate for local (national) borrowers. Equilibrium will be restored at the point where the difference between the interest rates paid by foreign and local borrowers will be exactly 2 percentage points. This corresponds to segment GF.

It is obvious that here the creditor country has achieved net unilateral benefits through taxation. It forced the borrowing country to pay 6% per annum instead of 5% on all ongoing debts. This effect of the increase in loan fees, graphically corresponding to the area of the LNMF rectangle, is significant enough to surpass losses from previously profitable foreign loans (the ELG triangle).

It is also clear that a country that borrows capital can resort to taxation if it has the appropriate market power. In the model under consideration, country B, by limiting its borrowing, can force country A's creditors to accept a lower rate of return.

What happens if the borrowing country imposes a tax of 2 percentage points on the same international assets? Then all the previously described results will be the same as in the case of the introduction of the tax by country A, except that country B in this case will receive a gain equal to the difference in the areas of the figures GLNZ and ELF (at the expense of country A and the world economy as a whole). If both countries try to impose taxes on the same international capital, the international economy will slide into financial autarky, i.e. back to points C and D, which means losses for everyone (for the entire world economy).

Foreign portfolio investment

Under foreign portfolio investments refers to capital investments in foreign securities, which, while not giving the investor the right to real control over the investment object, at the same time provide a sufficiently high liquidity of assets. Thus, the main goal of foreign portfolio investments is to obtain maximum profit from investments with the minimum acceptable level of risk from investments.

Most often, portfolio investments are considered as a means of protecting monetary assets from inflation and obtaining speculative income. At the same time, if portfolio investments give the desired result (due to the growth of market value and dividends paid), then neither the industry nor the types of securities are of fundamental importance for the speculator. The volume of international portfolio investment has especially grown over the past twenty years. If in the mid-1980s international securities transactions amounted to no more than 10% of GNP in the most developed countries world, then by the mid-90s their volumes increased to 100% or more of the GNP of these countries. It should be noted that more than 90% of foreign portfolio investments are made between developed countries and are growing at a rate that is significantly ahead of direct investment.

When forming an investment portfolio, the investor must, obviously, own the apparatus for assessing its quality, which is determined by the level of profitability and the degree of risk of the portfolio. portfolio return. Assume that investors measure their return on securities as a percentage of their initial outlay. Then the expected return (rate of return) of the i-th security can be determined by the formula:

where r p is the expected return of the portfolio;

f i - share of costs invested in i-th valuable paper;

n is the number of securities (assets) in the portfolio.

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discipline: "Foreign investments"

Topic: Direct and portfolio investments

Is done by a student

Sviridov D.

Saint Petersburg

Introduction

1. Economic entity and forms of investment

2. Internal and external sources of investment

3. Direct investment

4. Portfolio investment

5. Principles of forming an investment portfolio

Conclusion

Bibliography

INTRODUCTION

At present, the Russian economy is on the rise: a budget surplus, a decrease in inflation, a strengthening of the ruble, and an increase in business activity in the economy. However, the structure Russian economy, in which the main focus is on the extractive industry, does not undergo significant changes. According to experts, almost complete depreciation of the fixed assets of many Russian enterprises will take place in 2005-2007. Accordingly, the modernization of enterprises is a key factor in the successful development of the Russian economy in the coming years.

In this regard, the main and most urgent task public policy in the field of modernization of the country's industry is to create conditions for a dynamic investment process. As an example, we can consider countries that modernized their economies in a relatively short period after the Second World War (Japan and some Western European states). Their hallmark was a very high specific gravity investment in the gross national product. Stimulating investment for modernization industrial structure was carried out in the USA both in the early 60s and in the 80s.

The problem of investing in Russia is further complicated by the fact that many Russian and foreign investors remember the consequences financial crisis 1998. Until now, many foreign investors who left Russian market after the 1998 crisis, they never returned. Due to this government bodies Recently, special attention has been paid to the investment climate in Russia, which reflects the risks and efficiency of investment.

characteristic features market economy are the dynamism of the economic environment, the constant change in external factors that determine the policy of the enterprise, changes in competitive prices for products, fluctuations in exchange rates, inflationary depreciation of the funds of an economic entity, the emergence of competitors that provide products that are identical or superior in quality to products. To maintain the competitiveness of the enterprise and its market share, the enterprise constantly needs to reconstruct production capacities, update the existing material and technical base, increase the volume of production activities, and develop new types of activities.

To carry out the reconstruction of the old and purchase of new equipment, the enterprise needs a large investment of money, which, most often, is not available to the enterprise due to the lack of free funds. To attract the necessary funds, the company must pursue an aggressive investment policy.

Investment activity is inherent in any enterprise to one degree or another. With a large selection of types of investments, an enterprise is constantly faced with the task of choosing investment decision. Making an investment decision is impossible without taking into account the following factors: the type of investment, the cost of the investment project, the multiplicity of available projects, the limited financial resources available for investment, the risk associated with making a particular decision, etc.

Investments - cash, securities, other property, including property rights, other rights having a monetary value, invested in objects of entrepreneurial and (or) other activities in order to make a profit and (or) achieve another beneficial effect.

The significance of a comprehensive study of the state regulation of investment activity is determined by the fact that investment management is the most important means of structural transformation of Russia's production and social potential, increasing its efficiency, and pursuing effective countercyclical and social policies.

The main purpose of this essay is to reveal the essence of investment. The abstract will describe the concepts and essence of investments, the topic of sources of investment will also be disclosed. Studied direct and portfolio investment and their composition and functions.

1. ECONOMIC ESSENCE AND FORMS OF INVESTMENT

The concept of "investment" is quite multifaceted. In general, investment in the economic literature refers to any current activity that increases the future ability of the economy to produce output. Accordingly, the investment of cash and other capital in the implementation of various economic projects with the aim of increasing them later is called investing. Legal and individuals, making investments, are investors. The economic motive for investing funds is to receive income from their investment. In other words, investments include only those investments that are aimed at making a profit, increasing the volume of capital. Consumer investments, for example, in the purchase of household appliances, cars for domestic personal use and other goods, according to their economic content, do not qualify as investments. In world practice, there are three main forms of investment:

real (capital-forming) investments;

· portfolio investment;

investment in intangible assets.

Real (capital-forming) investments are investments in real assets, i.e. in the creation of new, reconstruction and technical re-equipment of existing enterprises, industries, production lines, various objects of industrial and social services in order to increase fixed assets or current assets.

Portfolio investments are investments in the purchase of securities of the state, enterprises, banks, investment funds, insurance and other companies. In this case, investors increase their not production, but financial capital, receiving income from holding securities. At the same time, real investments of funds spent on the purchase of securities are carried out by enterprises and organizations that issue these securities.

Investments in intangible assets include investments directed to the acquisition of licenses, patents for inventions, certificates for new technologies, trademarks, certificates for products and production technology and other intangible assets.

Investments in the economic literature are usually classified according to the following main features:

1. By the nature of participation in investment:

a) direct investment - direct investment of funds by an investor in investment objects (this type of investment is carried out mainly by trained investors who have fairly accurate information about the investment object and are well acquainted with the investment mechanism);

b) indirect investment - investment mediated by other persons (investment or financial intermediaries). These investments are made by investors who do not have sufficient qualifications to select investment objects and further manage them. In this case, they purchase securities issued by investment or other financial intermediaries (for example, investment certificates of investment funds and investment companies), and the latter, collected in this way investment funds place at their own discretion - they choose the most effective investment objects, participate in their management, and then distribute the received income among their clients.

2. By investment period:

a) short-term investments - investment of capital for a period not exceeding one year (for example, in quick commercial projects, short-term deposits and so on.);

b) long-term investments - capital investment for a period of more than one year (as a rule, in large and long-term investment projects). In the practice of investment companies and banks, long-term investments are detailed as follows: up to 2 years, from 2 to 3 years, from 3 to 5 years, more than 5 years.

3. By form of ownership:

a) private investments - investments made by citizens, as well as non-state enterprises and organizations;

b) public investments - investments made by central and local authorities and administration at the expense of budgets, extra-budgetary funds, as well as by state enterprises at the expense of their own and borrowed funds;

c) foreign investments - investments made foreign citizens, legal entities and states;

d) joint investments - investments made by persons of a given country and foreign states.

4. On a regional basis:

a) domestic investment - investing in investment objects located within the borders of a given country;

b) investments abroad - investment in investment objects located outside the country.

2. INTERNAL AND EXTERNAL SOURCES OF INVESTMENT

The main sources of investment are shown in Figure 1:

Fig. 1. Sources of funds for investment

Investments, especially real (capital-forming) investments, can be made both at the expense of internal (national) and external (foreign) sources. Both sources of investment play a significant role in enhancing the attraction of capital and the development of the country's economy. Initially, consider domestic sources of investment. On a national scale, the overall level of savings depends on the level of savings of the population, organizations and the government. Thus, the population can set aside certain funds for the future, companies can reinvest part of the profits received from their activities, and the government can accumulate funds by exceeding budget revenues over expenditures. At the same time, the volume of savings directly affects the volume of investments in the country, since part of the funds is directed to consumption, and the rest - to investments. Based on this, the following main internal sources of investment can be distinguished:

a) profit

Businesses and organizations often use profits as a source of investment. Part of the profits they receive is directed to business development, expansion of production and the introduction of new technologies. Obviously, those enterprises and organizations that do not allocate funds for these purposes eventually become uncompetitive. Enterprises sometimes try to make up for the lack of financial resources, including for business development, by raising prices for their products. However, it should be borne in mind that an increase in prices for their products causes a reduction in demand for them, which leads to problems with the sale of products, and, as a result, to a decline in production.

b) bank loan

Bank lending in many developed countries is one of the main sources of investment. At the same time, long-term lending plays a special role, since in this case the burden on the borrower is low and the company has time to “promote” the business. However, the role of bank lending as a source of investment depends on the development banking system and economic stability in the country. There is no doubt that the instability in the country leads to the reluctance of banks to issue long-term loans and finance investment projects. Generally, bank lending contributes to a gradual increase in production and, as a result, the overall recovery of the country's economy.

c) issue of securities

The issue of securities is gradually becoming a source of investment in Russia. At the same time, in developed countries, it is the issue of securities that is one of the main sources of financing investment projects. In order to raise funds, enterprises can issue both shares and bonds. At the same time, as a rule, any legal entities and individuals with free cash can act as buyers of securities. It is they who in this case act as investors, providing own funds in exchange for company securities.

d) budget financing

There is currently a surplus in Russia state budget. Due to this, it is possible to implement a part of investment projects at the expense of centralized sources of financing. At the same time, both non-repayable budget financing of nationally significant projects and lending to potentially profitable projects can be used. Public investment they are usually directed to the implementation of a limited number of regional programs, the creation of especially effective structure-forming objects, the maintenance of federal infrastructure, etc. At the present stage of development of the Russian economy, priority areas in terms of budget financing are the stimulation of industrial development and the maintenance of scientific and production potential.

e) depreciation charges

Depreciation deductions are aimed at restoring the means of production that wear out in the process of being used in the production of goods. However, in Russia, depreciation deductions are currently depreciating due to inflation, which significantly reduces their role as sources of investment. financial resources, received by the national economy from domestic sources of investment, is not always enough for the successful economic development of the country. This is especially true for countries with developing or transitional economies.

investment foreign portfolio regulation

3. DIRECT INVESTMENT

Direct investments - investments invested directly in the production and marketing of a particular type of product; investments that ensure the possession of a controlling stake. Direct investments are investments in the construction of economic facilities abroad. They give the right to complete control over the property. Form of income - entrepreneurial profit. IN this moment prevail over the portfolio. Gives the right to create own production abroad, to be included in the economy of other countries, to enjoy benefits as a foreign owner. Direct investments - investments in authorized capital economic entity in order to generate income and obtain rights to participate in the management of this economic entity.

3.1 Foreign direct investment

Foreign direct investment has a significant impact on the entire world economy, and its core is international business.

From an economic point of view, from the standpoint of firms, these are: providing for themselves a stable market directly or as a springboard for entering the world markets of "third countries"; the formation of its own ""internal market"," certain sectors of which are located in individual countries; inclusion of their interest in interstate relations at the regional and wider international level. Direct investment implies foreign control of 10 percent or more of the common stock, or an "effective voice" in the management of the enterprise. For some, this is only related to ownership, share in the share capital, which can be obtained through: the acquisition of shares abroad; reinvestment of profits; intercompany loans or intercompany debt.

There is and is actively developing, in addition, such various non-stock forms as subcontracts, management agreements, franchising, licensing transactions, production sharing, etc.

4. PORTFOLIO INVESTMENT

Portfolio investments - investments in long-term securities formed in the form of a portfolio of securities; small investments that cannot provide their owner with control over the enterprise. Portfolio investments are investments in securities, buying up shares of enterprises in another country. Predominate in those countries where the unstable political and economic environment. They do not give the right to control property, but provide influence on the enterprise and receive income in the form of dividends. Portfolio investment is practically capital invested in stocks, bonds, bills and other types of securities. Emergence and circulation financial capital are closely related to the functioning of real (i.e., productive) capital.

Thus, investments on the basis of the purpose of capital investment are divided into:

1) real investments;

2) portfolio investments.

Investments are classified according to the form of ownership. The structure of investments by forms is understood as their distribution on the basis of who these investments belong to. According to the form of ownership, investments are divided into:

1) state;

2) municipal;

3) private (investment of funds by citizens);

4) public associations (consumer cooperation, etc.);

5) mixed forms (without foreign capital);

6) foreign;

7) mixed form with foreign participation.

4.1 Portfolio foreign investment

Portfolio foreign investment is a form of export of capital by investing in securities of foreign enterprises, which does not give investors the opportunity to directly control their activities. The share of portfolio investments in the total volume of foreign investments in the early 2000s was 35-40%. The total amount of foreign portfolio investment in developing countries alone in 2004 amounted to $86.6 billion.

It is often difficult to draw a clear line between foreign direct investment and portfolio investment. Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. Portfolio - a set of various investment values brought together, serving as a tool for achieving a specific investment goal of the investor. The portfolio may include securities of the same type (stocks) or various investment values (stocks, bonds, savings and deposit certificates, pledge certificates, insurance policy, etc.).

Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. Portfolio - a set of various investment values brought together, serving as a tool for achieving a specific investment goal of the investor. The portfolio may include securities of the same type (stocks) or various investment values (stocks, bonds, savings and deposit certificates, pledge certificates, insurance policy, etc.).

5. PRINCIPLES OF FORMING INVESTMENT PORTFOLIO

The principles of forming an investment portfolio are the safety and profitability of investments, their growth, liquidity of investments. Let us consider the concept of liquidity in more detail. The liquidity of any financial resource is understood as its ability to participate in the immediate acquisition of goods (works, services). The liquidity of investment assets is their ability to quickly and without loss in price turn into cash.

When forming an investment portfolio, one should be guided by the following considerations:

security of investments (invulnerability of investments from shocks in the investment capital market),

income stability,

liquidity of investments, that is, their ability to participate in the immediate acquisition of goods (works, services), or quickly and without loss in price to turn into cash.

None of the investment values has all the properties listed above. Therefore, a compromise is inevitable. If the security is reliable, then the return will be low, because those who prefer reliability will bid high and beat the return. The main goal in the formation of the portfolio is to achieve the most optimal combination of risk and return for the investor. In other words, an appropriate set of investment instruments is designed to reduce the investor's risk to a minimum and at the same time increase his income to a maximum.

To effectively maintain an investment portfolio, a financial manager must use the following principles, which are widely used in world practice when forming an investment portfolio:

The success of investments mainly depends on the correct distribution of funds by asset types by 94% by choosing the type of investment instruments used (shares of large companies, short-term treasury bills, long-term bonds: etc.); by 4% by choosing specific securities of a given type, by 2% by assessing the moment of purchase of securities. This is explained by the fact that securities of the same type are highly correlated, i.e. if some industry is in recession, then the investor's loss does not really depend on whether papers of this or that company prevail in his portfolio.

The risk of investing in a certain type of securities is determined by the probability of profit deviating from the expected value. The predicted value of profit can be determined based on the processing of statistical data on the dynamics of profit from investments in these securities in the past, and the risk - as a standard deviation from the expected profit.

The overall return and risk of an investment portfolio can change by varying its structure. Exist various programs, allowing you to construct the desired proportion of assets of various types, for example, minimizing risk for a given level of expected profit or maximizing profit for a given level of risk, etc.

Estimates used in compiling the investment portfolio are of a probabilistic nature. Portfolio construction according to requirements classical theory is possible only if there are a number of factors: a mature securities market, a certain period of its operation, market statistics, etc.

The formation of an investment portfolio is carried out in several stages:

formulating the goals of its creation and determining their priority (in particular, what is more important - regular receipt of dividends or growth in the value of assets), setting risk levels, minimum profit, deviation from expected profit, etc.;

the choice of a financial company (it can be a domestic or foreign company; when making a decision, a number of criteria can be used: the reputation of the company, its availability, the types of portfolios offered by the company, their profitability, the types of investment instruments used, etc.);

the choice of the bank that will maintain the investment account.

The main question in portfolio management is how to determine the proportions between securities with different properties. Thus, the main principles of building a classical conservative (low-risk) portfolio are: the principle of conservatism, the principle of diversification and the principle of sufficient liquidity.

The principle of conservatism. The ratio between highly reliable and risky shares is maintained in such a way that possible losses from the risky share are overwhelmingly covered by income from safe assets.

The investment risk, therefore, does not consist in losing part of the principal, but only in obtaining an insufficiently high income.

Naturally, without risking, one cannot count on any super-high incomes. However, practice shows that the vast majority of clients are satisfied with income ranging from one to two deposit rates banks of the highest category of reliability, and do not want to increase income due to more high degree risk.

The principle of diversification. Investment diversification is the main principle of portfolio investment. The idea of this principle is well shown in an old English proverb: do not put all eggs in one basket - "do not put all your eggs in one basket".

In our language it sounds - do not invest all your money in one paper, no matter how profitable this investment may seem to you. Only such restraint will avoid catastrophic damage in the event of a mistake.

Diversification reduces risk due to the fact that possible low returns on one security will be offset by high returns on other securities. Risk minimization is achieved by including in the portfolio of securities a wide range of industries that are not closely related to each other in order to avoid the synchronism of cyclical fluctuations in their business activity. The optimal value is from 8 to 20 different types of securities.

Investments are scattered both between those active segments that we mentioned, and within them. For government short-term bonds and treasury bonds, we are talking about diversification between securities of different series, for corporate securities - between shares of different issuers. Simplified diversification is simply dividing funds between several securities without much analysis.

A sufficient amount of funds in the portfolio allows you to take the next step - to carry out the so-called sectoral and regional diversification.

The principle of sectoral diversification is to prevent the portfolio from being skewed towards securities of enterprises in the same industry. The fact is that a cataclysm can befall the industry as a whole. For example, a fall in the price of oil on the world market can lead to a simultaneous fall in the share prices of all oil refineries, and the fact that your investments are distributed among various enterprises in this industry will not help you.

The same applies to enterprises in the same region. A simultaneous decline in share prices may occur due to political instability, strikes, natural disasters, the introduction of new transport routes that bypass the region, etc. Imagine, for example, that in October 1994 you invested all your money in the shares of various Chechen enterprises.

An even deeper analysis is possible with the use of a serious mathematical apparatus. Statistical studies show that many stocks rise or fall in price, as a rule, simultaneously, although there are no visible links between them, such as belonging to the same industry or region. Changes in the prices of other pairs of securities, on the contrary, go in antiphase. Naturally, diversification between the second pair of securities is much more preferable. Correlation analysis methods allow, exploiting this idea, to find the optimal balance between various securities in the portfolio.

The principle of sufficient liquidity. It consists in maintaining the share of fast-moving assets in the portfolio at a level sufficient to carry out unexpected high-yield deals and satisfy clients' cash needs. Practice shows that it is more profitable to keep a certain part of the funds in more liquid (even if less profitable) securities, but to be able to quickly respond to changes in market conditions and individual profitable offers. In addition, contracts with many clients simply oblige to keep part of their funds in liquid form.

Portfolio investment returns represent the gross return on the entire set of securities included in a given portfolio, adjusted for risk. There is a problem of quantitative correspondence between profit and risk, which must be resolved promptly in order to constantly improve the structure of already formed portfolios and form new ones, in accordance with the wishes of investors. It must be said that this problem is one of those for the solution of which it is possible to quickly find a general solution scheme, but which are practically not solved to the end.

When considering the issue of creating a portfolio, the investor must determine for himself the parameters that he will be guided by:

it is necessary to choose the optimal type of portfolio

evaluate the combination of risk and income of the portfolio that is acceptable to you and, accordingly, determine the share of the portfolio of securities with different levels of risk and income

determine the initial composition of the portfolio

choose a scheme for further portfolio management

CONCLUSION

The investment process plays an important role in the economy of any country. Investment largely determines the economic growth of the state, employment of the population and constitutes an essential element of the base on which the economic development society. Therefore, the problem associated with the effective implementation of investment deserves serious attention. The importance of economic analysis for planning and implementing investment activities can hardly be overestimated. At the same time, a preliminary analysis is of particular importance, which is carried out at the stage of development of investment projects and contributes to the adoption of reasonable and justified management decisions.

The main direction of the preliminary analysis is to determine the indicators of the possible economic efficiency of investments, i.e. return on capital investments provided for by the project. As a rule, the time aspect of the value of money is taken into account in the calculations.

As a result, it should be noted that at present, investments should primarily be directed to the development of production, invested in production assets and other assets. Therefore, when implementing the strategy economic growth The government must create the conditions and management mechanisms necessary to offer long-term "cheap money" for the development of production and the economy as a whole.

The emerging Russian innovation system should not only ensure the formation of a knowledge-based economy, but also promote Russia's participation as an equal partner in the global innovation process. Despite the fact that until now, innovation activity has not yet become the basis of the country's economic development, over the past decade, real prerequisites have been created for the transition to an innovative development path. Based on the results of the analysis of the factors affecting the investment climate and the current political and economic state of Russia, it seems possible to take the following measures to improve the investment climate in Russia: ensuring political stability and consistency of reforms in the country, taking measures to further reduce inflation, tax incentives for investment activities, development of the stock market and stimulation of the preservation of Russian capital in the country.

In this essay, we examined what investments are and what types of them are found in the economy. Learned the essence of investment, sources of investment and their formation. Direct investments and their significance, and portfolio investments with their detailed description of the concept, composition and use of the portfolio, were considered in most detail.

In conclusion, I would like to note that investments are a complex mechanism that can significantly increase economic potential states. Therefore, the success achieved in this area will largely determine the successful implementation of socio-economic reforms and the economic development of the country as a whole.

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