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Principles of Financial Stability of Investment Funds
Morhachov I. V., Ovcharenko I. I., Zos-Kior M. V., Rudiashko A. I.

Morhachov, Illia V. et al. (2020) “Principles of Financial Stability of Investment Funds.” Business Inform 10:301–306.
https://doi.org/10.32983/2222-4459-2020-10-301-306

Section: Finance, Money Circulation and Credit

UDC 336

Abstract:
The purpose of this work is to substantiate the principles of financial stability of investment funds, which are inverse (opposite) to the principles of creating financial pyramids. The elements of scientific novelty include the specification of the peculiarities of compliance with the principles of financial stability of investment funds in modern conditions in Ukraine. An investment fund is also a kind of financial pyramid, but it can be created on the basis of the principles of stability, which are the opposite of the rules of existence of fraudulent financial pyramids. The such principles are defined as: dominance of assets over liabilities and minimization of overhead costs (including advertising); income from assets must exceed the value of liabilities; use of financial leverage or formation of assets according to a certain rule, which cannot be achieved by an individual investor; transparency and controlThe economic reasons for the existence of investment funds are considered, and the reasons for the success of individual financial institutions, which are essentially the relevant funds: Vanguard S&P 500 ETF and Berkshire Hathaway, are analyzed. The structure of the balance sheet of the investment fund is determined, which allows to adhere to certain principles of financial stability and use financial leverage. It is specified that an individual investor (individual) cannot use financial leverage for investment activities in the stock market, as it cannot issue bonds. The use of borrowed funds (broker or bank loans) allows an individual investor to make only short-term speculations that are very risky. At best, the average individual investor will only succeed in reaching the level of the S&P 500 stock index, while the investment fund will be able to exceed this index through the use of financial leverage.

Keywords: financial pyramid, investment fund, stocks, bonds, financial leverage.

Fig.: 3. Bibl.: 10.

Morhachov Illia V. – Doctor of Sciences (Economics), Associate Professor, Professor, Department of Public Administration, Management and Marketing, Volodymyr Dahl East Ukrainian National University (17 Ioanna Pavla II Str., Kyiv, 01042, Ukraine)
Email: [email protected]
Ovcharenko Ievgen I. – Doctor of Sciences (Economics), Professor, Head of the Department, Department of Public Administration, Management and Marketing, Volodymyr Dahl East Ukrainian National University (17 Ioanna Pavla II Str., Kyiv, 01042, Ukraine)
Email: [email protected]
Zos-Kior Mykola V. – Doctor of Sciences (Economics), Professor, Professor, Department of Entrepreneurship and Law, Poltava State Agrarian Academy (1/3 Skovorody Str., Poltava, 36003, Ukraine)
Email: [email protected]
Rudiashko Andrii I. – Student, Volodymyr Dahl East Ukrainian National University (17 Ioanna Pavla II Str., Kyiv, 01042, Ukraine)
Email: [email protected]

List of references in article

“Finansova piramida“ [Financial Pyramid]. https://uk.wikipedia.org/wiki/Фінансова_піраміда
Ovcharenko, Ye. I., Morhachov, I. V., and Derzhak, N. O. “Peredumovy derzhavnoho rehuliuvannia vysokotekhnolohichnoi samozainiatosti naselennia“ [Prerequisites for State Regulation of High-tech Self-employment]. In International economic relations and prospects for national development: contemporary challenges and solutions, part III, 299-315. Daugavpils: Daugava Print, 2018.
Ovcharenko, Ye. I. “Systema ekonomichnoi bezpeky pidpryiemstva: oznaky ta pryntsypy funktsionuvannia“ [The System of Economic Security of the Enterprise: Signs and Principles of Functioning]. Ekonomika. Menedzhment. Pidpryiemnytstvo. 2012. https://eme.ucoz.ua/pdf/242/ovcharenko.pdf
Semenenko, I. M. “Ekonomichna stiikist pidpryiemstva: sutnist i poniattia“ [Economic Stability of the Enterprise: Essence and Concept]. Visnyk Skhidnoukrainskoho natsionalnoho universytetu imeni Volodymyra Dalia, vol. 2, no. 144 (2010): 78-82.
Klius, Yu. I. “Udoskonalennia pidkhodiv do otsiniuvannia ekonomichnoi stiikosti promyslovykh pidpryiemstv“ [Improvement of the Approaches for Estimating Economic Sustainability of Industrial Enterprises]. Biznes-navihator. 2019. https://snu.edu.ua/wp-content/uploads/2020/06/03_19_10_19.pdf
Buzko, I. R., Vartanova, O. V., and Holubenko, H. O. Stratehichne upravlinnia investytsiiamy ta innovatsiina diialnist pidpryiemstva [Strategic Investment Management and Innovation of the Enterprise]. Luhansk: Vyd-vo SNU im. V. Dalia, 2002.
Ivchenko, Ye. A. “Transformatsii systemy ekonomichnoi bezpeky pidpryiemstva“ [Transformations of the Economic Security System of the Enterprise]. Sievierodonetsk : Vyd-vo SNU im. V. Dalia, 2018. http://dspace.snu.edu.ua:8080/jspui/bitstream/123456789/2186/1/2018_Монографія_Івченко.pdf
Tkachenko, V. G. Investitsionnyye i innovatsionnyye protsessy v APK Ukrainy v usloviyakh agrarnoy reformy [Investment and Innovation Processes in the Agro-industrial Complex of Ukraine in the Context of the Agrarian Reform]. Luhansk: Knyzhkovyi svit, 2010.
Snopenko, M. H., and Chorna, O. Yu. “Pidvyshchennia investytsiinoi pryvablyvosti rehionu“ [Increasing the Investment Attractiveness of the Region]. Tekhnolohiia-2019. Sievierodonetsk: SNU im. V. Dalia, 2019. 152-153.
Morhachov, I. V. Udoskonalennia derzhavnoi innovatsiinoi polityky rozvytku naukovo-tekhnichnykh system [Improving the State Innovation Policy for the Development of Scientific and Technical Systems]. Luhansk: Noulidzh, 2014.

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