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Management - časopis za teoriju i praksu menadžmenta
2008, vol. 13, iss. 49-50, pp. 77-82
article language: Serbian, English
document type: unclassified
published on: 14/01/2009
Mutual funds as a long-term financing source of the enterprise
University of Novi Sad, Faculty of Technical Science

e-mail: jelena@iis.ns.ac.yu, boban@iis.ns.ac.yu, gracanin@iis.ns.ac.yu

Abstract

Mutual funds are nonbanking financial institutions that collect savings of individual investors in order to invest capital on financial market. Capital market in Serbia is underdeveloped and shallow, characterized by a chronical shortage of quality long-term capital sources, and there are only few enterprises listed on the Stock Exchange A list attractive to mutual funds. The offer of quality shares, known as 'blue chips', is rather poor, however great demand for them is. In such circumstances companies are often faced with the problem of how to raise capital in case they do not have enough of their own. National companies still opt in favour of long-term loans (often under extremely unfavourable conditions), although the capital raising through IPO (initial public offer) and listing on the stock exchange would be a much more profitable solution in the long run. Banks and international monetary institutions are still the main creditors in Serbia. The mutual funds make decisions on investing into a company on the basis of financial statements, plans and projections, rather than on the basis of the prospectus. Companies are advised to make efforts to atract mutual funds which are considered to be long-term capital sources and the best way to do that is doing business transparently and constantly improving business results. This would contribute to reducing costs of company financing, improving the current market position, as well as capturing new market segments, improving the quality of the products and services, and financing new development projects. It is important that there be a mutual interest shared by both the management of the fund and that of the company, and this is, above all, the profit.

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