Direct and portfolio investments: basic information, differences. What are direct and portfolio investments? Investment object of direct and portfolio investments

07.10.2023

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in the discipline: “Foreign Investments”

Topic: Direct and portfolio investment

Is done by a student

Sviridov D.

Saint Petersburg

Introduction

1. Economic essence and forms of investment

2. Internal and external sources of investment

3. Direct investment

4. Portfolio investments

5. Principles of forming an investment portfolio

Conclusion

Bibliography

INTRODUCTION

Currently, the Russian economy is on the rise: a budget surplus, a decrease in inflation, a strengthening of the ruble, an increase business activity in economics. However, the structure Russian economy, in which the main focus is on the mining industry, does not undergo significant changes. According to experts, almost complete depreciation of fixed assets of many Russian enterprises will occur 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 of state 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, in a relatively short period of time after the Second World War, modernized their economies (Japan and some Western European countries). Their distinctive feature was a very high share of investment in the gross national product. Stimulation of investment in order to modernize the industrial structure was carried out in the United States both in the early 60s and in the 80s.

The problem of investment in Russia is further complicated by the fact that many Russian and foreign investors remember the consequences of the 1998 financial crisis. Until now, many foreign investors who left Russian market after the 1998 crisis, they never came back. In this regard, government authorities have recently paid special attention to the investment climate in Russia, which reflects the risks and efficiency of investment.

Characteristics market economy are the dynamism of the economic environment, constant changes in external factors that determine the policy of the enterprise, changes in competitive prices for products, fluctuations in exchange rates, inflationary depreciation of the assets of an economic entity, the emergence of competitors providing products of identical or superior quality. To maintain the competitiveness of the enterprise and its market share, the enterprise constantly needs to carry out reconstruction production capacity, updating the existing material and technical base, increasing the volume of production activities, developing new types of activities.

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

Investment activity, to one degree or another, is inherent in any enterprise. With a large selection of investment types, 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: type of investment, cost of the investment project, multiplicity of available projects, limited financial resources available for investment, risk associated with making a particular decision, etc.

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

Significance of a Comprehensive Study government regulation 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 implementing effective counter-cyclical and social policies.

The main purpose of this essay is to reveal the essence of investments. The abstract will describe the concepts and essence of investment, and will also cover the topic of sources of investment. Direct and portfolio investments and their composition and functions have been studied.

1. ECONOMIC NATURE AND FORMS OF INVESTMENT

The concept of “investment” is quite multifaceted. In general, investment in economic literature refers to any current activity that increases the future ability of the economy to produce output. Accordingly, investing money and other capital in the implementation of various economic projects with the aim of subsequently increasing them is called investing. Legal and individuals, implementing investment 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 and increasing the volume of capital. Consumer investments, for example, in the purchase of household appliances, cars for household personal use and other goods, in terms of their economic content, do not qualify as investments. In world practice, there are three main forms of investment:

· real (capital-forming) investments;

· portfolio investment;

· investments 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, production facilities, technological lines, various production and social service facilities 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 financial capital rather than their production capital, receiving income from owning securities. At the same time, real investments of funds spent on the purchase of securities are made by enterprises and organizations that issue these securities.

Investments in intangible assets include investments aimed at acquiring licenses, patents for inventions, certificates for new technologies, trademarks, certificates for products and production technology and other intangible assets.

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

1. By the nature of participation in investment:

a) direct investment - direct investment of funds by the 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 familiar with the investment mechanism);

b) indirect investments - investments 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 select the most effective investment objects, participate in their management, and then distribute the resulting income among their clients.

2. By investment period:

a) short-term investments - investment of capital for a period of no more than one year (for example, in quickly implemented commercial projects, short-term deposits and so on.);

b) long-term investments - investing capital for a period of more than one year (usually 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 management at the expense of budget funds, off-budget funds, as well as state-owned enterprises at the expense of their own and borrowed funds;

V) foreign investment- investments made by foreign citizens, legal entities and states;

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

4. By regional basis:

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

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

2. INTERNAL AND EXTERNAL SOURCES OF INVESTMENT

The main sources of investment are shown in Fig. 1:

Fig. 1. Sources of funds for investment

Investments, especially real (capital-forming) investments, can be made both from internal (national) and external (foreign) sources. Both sources of investment play a significant role in enhancing the attraction of capital and development of the country's economy. First, let's consider internal sources of investment. On a national scale, the overall level of savings depends on the level of savings of the population, organizations and government. Thus, the population can save 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 expenses. At the same time, the volume of savings directly affects the volume of investment in the country, since part of the funds is spent on consumption, and the rest on investment. Based on this, the following main internal sources of investment can be identified:

a) profit

Businesses and organizations often use profits as a source of investment. They use part of the profit received to develop their business, expand production and introduce new technologies. It is obvious that those enterprises and organizations that do not allocate funds for these purposes ultimately become uncompetitive. Enterprises sometimes try to make up for the lack of financial resources, including for business development, by increasing 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 consequence, to a decline in production.

b) bank loan

Bank lending in many developed countries is one of the main sources of investment. Wherein, special role long-term lending plays a role, since in this case the burden on the borrower is low and the enterprise has time to “promote” the business. However, the role of bank lending as a source of investment depends on the development of the banking system and economic stability in the country. There is no doubt that instability in the country leads to the reluctance of banks to issue long-term loans and finance investment projects. In general, bank lending contributes to a gradual increase in production and, as a result, to the overall growth 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, the issue of securities 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, buyers of securities, as a rule, can be any legal entities or individuals with available funds. 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. Thanks to this, it is possible to implement part of investment projects through 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 usually allocated to the implementation of a limited number of regional programs, the creation of particularly effective structure-forming facilities, the maintenance of federal infrastructure, etc. At the present stage of development of the Russian economy, priority areas from the point of view of budget financing are stimulating industrial development and maintaining scientific and production potential.

e) depreciation charges

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

investment foreign portfolio regulation

3. DIRECT INVESTMENT

Direct investments are investments made directly into the production and marketing of a specific type of product; investments that ensure ownership of a controlling stake. Direct investments are investments in the construction of economic facilities abroad. They give the right to complete control over property. The form of income generation is entrepreneurial profit. IN this moment prevail over portfolio ones. They give the right to create their own production abroad, join the economy of other countries, and enjoy benefits as a foreign owner. Direct investments are investments in the authorized capital of an 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 global economy, and international business is at its core.

WITH economic point From the point of view of firms, this is: securing a stable market for themselves directly or as a springboard for entering world markets of “third countries”; formation of your own “internal market”, certain sectors of which are located in individual countries; inclusion of one’s interest in interstate relations at the regional and broader international level. Direct investment requires foreign control of 10 percent or more ordinary shares, or “an effective voice” in enterprise management. For some, this is associated only with ownership, a share in the share capital, which can be obtained through: purchasing shares abroad; reinvestment of profits; intercompany loans or intercompany debt.

In addition, there are various non-joint-stock forms that exist and are actively developing, such as subcontracts, management agreements, franchising, licensing transactions, production sharing, etc.

4. PORTFOLIO INVESTMENTS

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, purchasing shares of enterprises in another country. They prevail in countries where the political and economic environment is unstable. They do not give the right to control property, but provide influence on the enterprise and receipt of income in the form of dividends. Portfolio investments are practically capital invested in stocks, bonds, bills and other types of securities. The emergence and circulation of financial capital are closely related to the functioning of real (i.e. productive) capital.

Thus, investments based on the purpose of investing capital are divided into:

1) real investments;

2) portfolio investments.

Investments are classified by type of ownership. The structure of investments by form is understood as their distribution according to who owns these investments. By type of ownership, investments are divided into:

1) state;

2) municipal;

3) private (investments 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 investments

Foreign portfolio investment is a form of capital export by investing it 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 amounted to 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 direct and portfolio foreign investment. Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. A portfolio is a collection of various investment values collected together, serving as a tool for achieving a specific investment goal depositor. The portfolio may include securities of the same type (stocks) or various investment values (stocks, bonds, savings and deposit certificates, certificates of pledge, insurance policy, etc.).

Portfolio investments are associated with the formation of a portfolio and represent the acquisition of securities and other assets. A portfolio is a collection of various investment values collected together that serve 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, certificates of pledge, insurance policy, etc.).

5. PRINCIPLES FOR FORMING AN INVESTMENT PORTFOLIO

The principles for forming an investment portfolio are the safety and profitability of investments, their growth, and the liquidity of investments. Let's take a closer look at the concept of liquidity. The liquidity of any financial resource is understood as its ability to participate in the immediate purchase 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, you should be guided by the following considerations:

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

stability of income,

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 be converted into cash.

None of the investment values has all the properties listed above. Therefore, a compromise is inevitable. If the security is safe, then the yield will be low, since those who prefer safety will bid high and drive down the yield. The main goal when creating a portfolio is to achieve the most optimal combination between risk and return for the investor. In other words, the 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 the maximum.

To effectively manage your investment portfolio 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 among types of assets 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 purchasing securities. This is explained by the fact that securities of the same type are highly correlated, i.e. If some industry is experiencing a decline, then the investor’s loss does not really depend on whether the securities of one or another company predominate in his portfolio.

The risk of investing in a particular type of security is determined by the likelihood of earnings deviating from expected values. The predicted profit value 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 the 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 at a given level of expected profit or maximizing profit at a given level of risk, etc.

The estimates used in compiling the investment portfolio are probabilistic in nature. Construction of a portfolio in accordance with the requirements of classical theory is possible only if a number of factors are present: an established 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 an increase in the value of assets), setting risk levels, minimum profit, deviation from expected profit, etc.;

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

choosing a bank that will maintain an investment account.

The main question when managing a portfolio is how to determine the proportions between securities with different properties. Thus, the main principles of constructing a classic 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 reliable assets.

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

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

The principle of diversification. Diversification of investments is the basic principle of portfolio investment. The idea of this principle is well illustrated in the 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 an error.

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

The dispersion of investments occurs 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 simply consists of dividing funds among several securities without serious analysis.

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

The principle of industry 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 oil prices on the world market can lead to a simultaneous fall in the share prices of all oil refineries, and the fact that your investments will be distributed among various enterprises in this industry will not help you.

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

An even more in-depth analysis is possible using serious mathematical tools. Statistical studies show that many stocks rise or fall in price, usually at the same time, although there are no such visible connections between them, such as belonging to the same industry or region. Price changes for other pairs of securities, on the contrary, are in antiphase. Naturally, diversification between the second pair of securities is much more preferable. Correlation analysis methods make it possible, by exploiting this idea, to find the optimal balance between various securities in a portfolio.

The principle of sufficient liquidity. It is to maintain the share of quick-selling assets in the portfolio at least at a level sufficient to carry out unexpectedly high-yield transactions and satisfy clients’ needs in cash. Practice shows that it is more profitable to keep a certain part of funds in more liquid (even if less profitable) securities, but to be able to quickly respond to changes in market conditions and individual profitable offer. In addition, contracts with many clients simply oblige them to keep part of their funds in liquid form.

Income from portfolio investments represents gross profit for the entire set of securities included in a particular portfolio, taking into account risk. The problem of quantitative correspondence between profit and risk arises, which must be solved promptly in order to constantly improve the structure of already formed portfolios and the formation of new ones, in accordance with the wishes of investors. It must be said that this problem is one of those for which it is possible to quickly find a general solution scheme, but which are practically not completely solved.

When considering creating a portfolio, an investor must determine for himself the parameters that will guide him:

you need to choose the optimal type of portfolio

assess the combination of portfolio risk and income 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 further portfolio management scheme

CONCLUSION

The investment process plays an important role in the economy of any country. Investment largely determines the economic growth 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, preliminary analysis, which is carried out at the stage of development of investment projects and contributes to the adoption of reasonable and informed management decisions, is of particular importance.

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

As a result, it should be noted that currently investments should first of all be directed to the development of production, invested in production assets and other assets. Therefore, when implementing an economic growth strategy, 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 establishment of a knowledge-based economy, but also promote Russia's participation as an equal partner in the global innovation process. Despite the fact that to date, innovative activity has not yet become the basis of the country’s economic development, over the last decade real prerequisites have been created for the transition to an innovative path of development. Based on the results of the analysis of factors influencing the investment climate and the current political and economic state of Russia, it seems possible to carry out 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 activity, development of the stock market and stimulation of conservation Russian capital in the country.

In this essay, we looked at what investments are and what types of them are found in economies. We learned the essence of investment, sources of investment and their formation. Direct investments and their importance, and portfolio investments with their detailed description of the concept, composition and use of a portfolio were considered in most detail.

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

BIBLIOGRAPHY

1. Blokhina T. Institutional investment market: state and prospects // Economic Issues, 2003, No. 1.

2. Large economic dictionary. M.: Book world. 2008 - 860.

3. Balabanov I.T. / Financial management: Textbook. manual - M.: Finance and Statistics, 2000.

4. Birman G., Schmidt S. Economic analysis of investment projects. - M.: Banks and exchanges, UNITY, 2001.

5. Ramilova A. Direct foreign investments as an object of state regulation // Russian Economic Journal, 2003, No. 7.

6. Serov V.M., Ivanovsky V.S., Kozlovsky A.V. Investment management: Textbook for Universities / State University of Education - M.: ZAO “Finstatinform”, 2002 - 175 p.

7. Urinson Y. “On measures to revive the investment process in Russia” // Questions of Economics, 2001, No. 1.

8. Cherkasov V.E. International investments. Educational and practical manual. - M.: Delo, 2001. - 160 p. Sharp W., Alexander G., Bailey J. Investments: trans. from English - M.: INFRA-M, 1999- 1028 p.

9. Khodov L. On the distinction between direct and portfolio investments. - M., REJ, No. 2, 2006.

10. Kornyukhina N.B. Sources of investment resources in Russia. // EKO.- 2001.- No. 1.- P. 76.

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Types of portfolio investments

Types of portfolio investments are determined based on their profitability and risk. There are three main types of investments for a portfolio investor.
Investments with high percentage income. They also involve a high level of risk.
Investments having the average size profits and risks in them will accordingly be lower.
The third type of portfolio investment can be called combined, because a portfolio investor invests in both assets with high returns and securities with average returns. Which, in essence, is risk diversification.
There are still types of portfolio investments by timing, as well as national and foreign.

Foreign Portfolio Investments

As I said above, one of the types of investment is foreign portfolio investment. They are good because they create a large space for choosing attachment objects. Among many countries, you can find shares of companies that are optimally suited both in terms of income and risk level. But there are, of course, disadvantages. Foreign Portfolio Investments require knowledge of the economy, politics and language of the country. Otherwise do it right choice it will be difficult. Besides, foreign portfolio investment create legal difficulties, as well as taxation problems. In addition, the costs of registering investments and servicing them will increase.

Now, I hope you understand what direct and portfolio investments are.
In general, this topic is very extensive. In order to feel like a professional at it, you need to work hard. And you need to start by obtaining the maximum possible amount of knowledge in this area. In my blog I talk only about basic concepts. But if you intend to invest seriously, then you need to “dig deeper.”

Direct investments	Portfolio investment
Direct investment involves the direct, direct participation of the investor in investing capital in a specific investment object, be it the acquisition of real assets, or the investment of capital in the authorized capital of an organization.	The objects of direct investment are, as a rule, equipment, buildings, and know-how.
Direct investors are companies and entrepreneurs who invest in the acquisition of equipment, buildings, know-how in order to organize production and make a profit from such direct investments. Although in joint stock companies	There is no such division into portfolio and direct investors. There are minority shareholders and majority shareholders. Large, medium, small.
A portfolio investor is a person or institution that purchases a financial instrument for its investment portfolio, that is, a certain set of investment instruments. Portfolio formation is associated with the tasks of risk diversification across different financial assets. Therefore, an investor who purchases a small block of shares or securities of an enterprise is not a direct, that is, a strategic investor, but is a portfolio investor.	Direct investments can also be made at the expense of financial (portfolio)
Briefcases - they can’t	Cannot be carried out through the secondary securities market
They can be carried out through the secondary securities market, but cannot turn into direct ones, since they go only to the owners of shares, and not to the enterprise. Yes, but not related to direct ones in any way

When forming the Authorized Capital, there is a relationship between direct and portfolio funds. Portfolios ultimately turn into direct ones.

Often real investments cannot be made without issuing shares, i.e. without financial investments. Financial investments are an essential part of planning direct, real investments.
From the foregoing, we can conclude that financial investments are a link in the transformation of savings into real investments and serve as one of the most important channels through which savings enter production, and at the same time they can act as a relatively independent form of investment.

54. The role of scientific and technological progress in the development of the world economy.

STP is a continuous process of discovering new knowledge and applying it in social production, allowing for a new combination of existing resources in the interests of increasing the production of high-quality final products at the lowest cost. In a broad sense, scientific and technological progress refers to the creation and implementation of new equipment, technologies and materials, as well as the use of progressive methods of organizing and managing production.

2. Revolutionary (scientific and technical - scientific and technological progress), manifested in a qualitative update of equipment and technologies, a sharp increase in labor productivity; economic growth is achieved through qualitative changes.

As evidenced by the practice of developing scientific and technical potential, sources of R&D financing play an important role: where the share of private investment averages 60% or more, a positive trend in the growth of investments in R&D and their high efficiency remains. This trend is characteristic of almost all OECD member countries: an increase in private investment against the background of a decrease in the share of investment from the state budget. So in the United States, private investment accounts for more than 60%, budgetary investment accounts for an average of 20–25%, and the rest comes from charitable foundations and grants. According to experts, the effectiveness of the US innovation system is due to clearly formulated tasks on a national scale, a high degree of intellectual property protection within the framework of state innovation policy (stimulating active patenting), a large share (~ 50%) of venture capital in the total volume of R&D financing, close ties between TNCs and universities. The American model in the field of R&D practically extends to all OECD countries, where, in addition to the United States, the leading EU countries occupy a stable position (Table 23).

At the same time, at the turn of the XX/XXI centuries. and in the development of the 2000s. The share of the group of developing countries is noticeably increasing, especially in the Asia-Pacific region. Here the leading role belongs to the PRC. The share of R&D expenditures in China's GDP is constantly growing: the period from 1996 to 2009. costs increased 3 times from 0.6% to 1.7%, respectively. A shift towards rising R&D spending in China, along with government policy, is due to investments by TNCs in their foreign branches, which is explained by the increasing professional level of China's scientific personnel and their relatively low cost compared to developed countries.

As for Russia, the scientific and technical sphere here is noticeably inferior to developed countries in terms of the scale and intensity of innovation. Russia accounts for just over 1% of global spending on science, although research organizations employ more than 6% of the world's scientific workers. Funding for scientific research is carried out mainly by the state (more than 60%), while the share of the domestic business sector does not exceed 15%. Russia spends less on science than Japan by 8–9 times, Germany by 4 times, and the USA by more than 20 times. The reduction in internal costs for science is accompanied by a reduction in the number of scientific organizations (primarily industry ones) and the number of workers employed in them.

Of the variety of investment classification grounds, official statistics distinguishes the two most common classes:

direct (strategic) investments, ensuring the creation and reproduction of fixed assets;

portfolio (speculative) investments, related to the placement of funds in financial assets.

Direct investments usually represent investments in a specific project and involve the acquisition of real assets. It's like this form of investment of entrepreneurial capital, which provides the investor with control over the activities of the enterprise And gives him the opportunity to dispose of the profit received.

Direct investment is defined as the funds required for:

construction (expansion, reconstruction, modernization) and equipping of investment facilities;

expenses for preparation of capital construction;

increase in working capital required for the normal functioning of the enterprise.

Direct investments are made without intermediaries between the investor and their recipient. They, as a rule, are medium- or long-term, which implies making a profit no earlier than in 5-7 years. Such capital investments are distinguished by the investor’s desire for qualitative changes in the process of material production and the achievement of a socially significant result.

Special mention should be made investment for the purpose of control over an enterprise by acquiring a controlling stake.

If the funds from the purchase of shares of an enterprise go directly to the issuer, who can use them for the development of production, then this is, of course, a direct investment of capital.

If a controlling stake in a company is purchased on the secondary market and the money paid for the assets is not credited to the issuer’s account, the investment is still classified as direct, since it is made with the aim of acquiring control over a specific enterprise.

Thus, a market is formed corporate control - financial business sector, in which strategic investors operate, buying large blocks of shares in the most profitable or promising companies.

Briefcase(speculative) investments are investments in the purchase of securities for stock market for the purpose of their further resale and profit.

They represent an investment of capital, as a rule, in a group of companies by purchasing securities of various issuers in the hope that a fall in the price of shares of some companies will be compensated by an increase in the value of others.

To reduce the risk of possible loss, an investor usually purchases no more than 10% of the shares of a particular enterprise, which does not give the right to complete control over its activities. The purpose of portfolio investment is different - resale of shares when conditions on the stock market change.

Portfolio investments are characterized by short periods of capital investment, since the main task of the investor is to make a profit by forming and managing an optimal investment portfolio through transactions of purchase and sale of securities.

Since the presence of significant risks requires constant analysis of the processes occurring in the stock market, portfolio investments are the subject of professional activity.

To manage them, specialized companies and funds are created, and special groups of analysts operate who use advanced domestic and foreign developments in the field of traditional and non-traditional methods of economic and systemic analysis of processes occurring in financial markets.

Constant control over the structure of investment portfolios, combined with a flexible system for choosing an investment strategy, allows stock market participants to receive decent profits while guaranteeing the safety of investments.

Portfolio investments play an important role in the development of a modern economy.

Investments in government securities go to cover the budget deficit and thus indirectly contribute to the socio-economic development of the country.

Investments in corporate securities may result in the following funds:

directly to the enterprise, what contributes to its development (when purchasing shares of a new issue);

to their former owner, which does not in any way affect the economic situation of the enterprise (for purchase and sale transactions of shares already traded on the stock market).

The latter form speculative capital, which is very mobile. If conditions are favorable, they can quickly and on a large scale pour into the country's stock market to buy shares of promising companies, highly profitable government securities or profitable bonds. When the situation worsens, portfolio investments leave the stock market just as quickly, as happened in Russia at the end of 1998.

At the same time, in conditions of a general shortage of financial resources, such “wandering capital”, coming into the country, feeds the working capital of enterprises, expands their possibilities for maneuver, contributing to the intensification of economic activity.

Consequently, the influx of portfolio investment (as well as direct investment) contributes to the development of the economy as a whole, increases the liquidity of investments and is an indicator of development trends.

For example, strategic investors will not contribute money to the authorized capitals of those joint-stock companies whose shares are not quoted on the stock market, that is, they are not the object of portfolio investment.

Essentially, the difference between the types of investment considered is that the process of real investment is always associated with qualitative changes in the investment object, and financial investment - with quantitative ones.

One should not assume that direct and portfolio investments are antipodes. All investment funds existing in the world, in addition to direct investments, necessarily acquire stakes in enterprises in order, together with the management of the purchased company, to achieve an increase in its value. After this, their portion of the securities is sold at higher prices.

It is profitable for funds specializing in direct investments to carry out such speculative operations on the stock market, although their period is longer than when trading on stock prices.

On the global capital market in developed countries with a normally functioning securities market portfolio investment are quite widespread. The stock values in these countries are generally recognized and significant internationally. Therefore, investors invest their funds without much risk to themselves. These are, first of all, portfolios of securities of international organizations, transnational companies and foreign giant firms of highly developed countries, financial and credit institutions.

In Russia, at this stage of its development, the bulk of investments relates to direct, whereas financial investment (portfolio) is in its infancy and does not yet have a significant impact on the capital market.

The Russian stock market has a very small turnover and currently does not play a significant role in the country's economy. Formally, it exists, but it cannot be said that it operates effectively. Due to lack of demand, shares of 10-15 corporations are actually traded (RAO ES of Russia, CJSC Mosenergo, LUKOIL, Surgutneftegaz, Gazprom, Rostelecom, Sberbank and some others). Most Russian companies, although they are mainly called open, operate under the same laws under which closed corporations operate in other economies.

This is a very interesting feature of our economy.

In order for the securities market - this unique self-regulating mechanism for the redistribution of funds between industries and enterprises - to start working effectively, it is necessary:

install uniform rules games for all participants in the economic process;

ensure that business becomes transparent;

free yourself from the influence of oligarchic structures on decisions government bodies.

This, in fact, is the task of the representative and executive authorities to intensify investment activity in the country.

Evgeny Smirnov

Bsadsensedinamick

# Investments

What are direct and portfolio investments?

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

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

It is well known that the classification of investments has a complex and ramified structure. Profitable financial investments vary in many ways. This article will discuss the similarities and differences between direct and portfolio investments.

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 typical for this type of investment: a company needs money to purchase equipment that can strategically solve the problem of increasing profitability. The management of the enterprise approaches a person (individual 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 disbursing the requested funds. The conditions for control and cooperation are discussed.

Portfolio investments represent an injection of money into the turnover of an enterprise in order to increase its financial assets. About achieving control economic activity in this case there is no question. The investor is interested in the rate of return, that is, the rate of profit per investment monetary unit or one share.

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

Foreign portfolio investments indicate general trust in the recipient country. Since relatively small shares of the stock do not provide the opportunity to interfere in the management of the enterprise, the financier, when purchasing them, hopes for the stability and reliability of his investment. In general, capital inflows are beneficial for the national economy and confirm a good investment climate.

The same considerations apply to direct investment. A foreigner buying shares in an enterprise must have a minimum acceptable degree of confidence that his funds are protected by the state and that the legislation is stable. Otherwise, the acquisition may result in losses, even if the investor is actively involved in the management of the property and has the necessary skills for this.

In some cases, the criterion of similarity may be the method of purchasing assets (production or financial). This can be done directly with the issuer of securities or indirectly at stock exchange or the secondary market from a third party. In this case, what matters is not the place in which the sale of shares is carried out, but the purpose of this operation. If a financier wants to obtain the right of management control, he buys the enterprise “in parts” from different holders.

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

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

How do direct investments differ from portfolio investments?

First of all, direct investments differ from portfolio investments in 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 his own discretion as a financial instrument. Direct investment involves strictly intended use(purchase of fixed assets, their renewal, modernization, construction, etc.).

Another difference is the amount. The contents of the portfolio are formed by several types and types of securities. This structure is appropriate for ensuring diversification, but is completely unsuitable for a takeover strategy. In other words, it is difficult to concentrate not only a controlling stake, but even a tenth of the total capital of an individual enterprise in one portfolio.

The third significant difference is in the timing of investment. Shares in a portfolio can be held for quite a long time, but can be sold at any time if they no longer provide financial returns. There are other considerations for selling, particularly 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. Such an investment, by definition, is aimed at developing production capacity and subsequent payback. There is little point in getting rid of securities before reaching point “zero” (beginning of making a profit).

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

In the United States, 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 of financial advisors), that is, they act as investors. Russians don't trust securities. And the enterprises themselves (especially successful ones) prefer to find other sources of third-party capital for fear of the consequences of an uncontrolled issue of shares.

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

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

It is obvious that the motivations of direct and portfolio investors are different. It is easier to understand the motivations 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 in capital investments. Naturally, most of them are straight.

Financial investments consist of investments in instruments for generating income. When implementing them, the investor does not go into the intricacies of the economic mechanism of the issuing enterprise. He will be pleased if he receives an acceptable amount of dividends for the ruble invested in a certain company. This is precisely the situation described by the American writer Theodore Dreiser: small stock exchange dealers watched with which foot the financial tycoon would step onto the asphalt when getting out of the car. If on the left, then today he is “bearing”, that is, he is selling. This was their sign. Investor-financiers do not think about how the invested enterprises operate.

We can come to the conclusion that a direct investor seeks income by developing a specific enterprise and increasing its value. Ideally, he absorbs a growing company and receives 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 duration of the investment cycle also serves as a classification criterion. Short-term investments are considered to be two years or less. The average period is from 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;
government;
internal;
foreign;
joint.

Each of the subjects pursues its own goals.

When allocating funding for a project, the state takes into account its social or other important significance (for example, general economic or even defense).

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

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

With the sectoral attribute, everything is clear: investments can be directed to individual target sectors of the economy ( Agriculture, light, heavy or other industries, IT technologies, trade, etc.).

An investor's interest in a certain sectoral specialization indicates the potential of the industry, in other words, its insufficient development.

Another criterion for classifying financial investments is the degree of riskiness. An aggressive portfolio indicates the 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. Requirements for stock liquidity are dictated by the need to quickly raise funds.

Summarizing the above areas of investment, we can come to the conclusion that the main goal of portfolio investments is to extract speculative income. Direct investments are aimed at developing the real sector of the economy.

Direct and indirect investments: essence, forms and principles

Indirect financial investments are called direct or portfolio investments in the form of securities purchased from intermediaries.

The role of the “transfer link” is specialized funds, mutual funds, brokerage and insurance structures, banks and financial consulting organizations.

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

Indirect investments are also called indirect or indirect. 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 direct investment.