Investment funds in Uzbekistan: how they work

Picking individual shares takes time, knowledge and enough money to spread across several companies. A fund offers another route: many investors pool their money, a professional manager invests it according to published rules, and each investor owns a proportional slice of the whole. This guide explains how funds work in general, what Uzbek law says about them, and the questions to ask before you hand money to one.

The legal rules below come from the Law of the Republic of Uzbekistan «On investment and mutual funds» of 25 August 2015, as published on lex.uz in the edition current as of 28 September 2026.

The idea in one paragraph

A fund collects money from many people and buys a portfolio of assets, for example shares, bonds and cash. The value of everything the fund owns, minus what it owes, is its net asset value (NAV). Divide the NAV by the number of units or shares in issue and you get the value of one unit. When the portfolio rises, each unit is worth more; when it falls, each unit is worth less. You gain diversification and professional management, and you pay for them through fees.

A worked example

The numbers are illustrative and describe no real fund.

A fund holds shares worth 480 million soʻm and cash of 30 million soʻm, and owes 10 million soʻm in fees and other liabilities. Its NAV is 480 + 30 − 10 = 500 million soʻm. If there are 50,000 units, each unit is worth 500,000,000 ÷ 50,000 = 10,000 soʻm.

You invest 1,000,000 soʻm and receive 100 units. A year later the portfolio has grown and the NAV per unit is 11,000 soʻm. Your 100 units are worth 1,100,000 soʻm, a gain of 10% before tax. Had the NAV per unit fallen to 9,000 soʻm, your units would be worth 900,000 soʻm. A fund does not promise a return.

Two legal forms in Uzbekistan

The law recognises two kinds of fund.

Investment fund. A joint-stock company that issues shares to raise investors' money and invest it in investment assets (Article 3). As a shareholder you have the rights of a shareholder in a joint-stock company. It can be set up with or without an obligation to buy back the shares it has issued, and the type is stated in its founding documents.

Mutual fund. A pool of money from two or more investors handed over to trust management for investment (Article 4). It is not a legal entity. Your share in it is an investment unit, a book-entry security whose ownership is confirmed by a statement from your depo account issued by the Central Securities Depository (Article 5). It too can be set up with or without an obligation for the manager to buy units back out of the fund's money, and the type is stated in the trust management agreement.

Units are traded by buying and selling on the stock exchange (Article 20). The Central Securities Depository is the only agent allowed to issue, redeem and exchange units, acting for the manager (Article 23). Our guide to depo accounts and the Central Securities Depository explains where your units would be recorded.

Who runs a fund

A fund is run by a trust manager, a legal entity that is a professional participant in the securities market (Article 8). The law sets several protections:

• the manager must have its own capital of at least 5% of the average annual value of the assets it manages;
• it may not buy shares or units of the funds it manages;
• it must keep the fund's assets on a separate balance with a separate bank account, and the securities are recorded and held at the Central Securities Depository (Article 15);
• it must organise an internal audit service.

Each fund has an investment declaration (Article 10), the document that states its goals, the types of assets it may buy, a description of the risks, the mix of assets it must keep and how long these rules apply. It is filed with the securities market regulator within ten days of approval. Read it before you invest: it tells you what the manager is allowed to do with your money.

Limits on what a fund may do

The law builds diversification and caution into funds:

• an investment fund may not put more than 10% of its net assets into the securities of one issuer or into a stake in one limited liability company (Article 13);
• it may borrow only if total debt stays within 15% of its net asset value, and only for up to three months;
• it may not buy options or futures, or shares in other investment funds;
• a mutual fund may not invest more than 10% of its assets in the securities of one issuer (Article 19).

These limits reduce the chance that one company's failure sinks the fund. They do not remove market risk: if the whole market falls, a diversified fund falls with it. Our guide to diversification and risk explains the difference.

Fees: the cost you can control

Every fund charges for management, and the fee comes out of the fund's assets whether it performs well or not. Small percentages add up over time.

An illustrative example: you invest 10,000,000 soʻm and the portfolio earns 12% a year before fees for ten years. With no fee it grows to about 31.1 million soʻm. With a fee of 2% of assets taken each year, it grows to about 25.4 million soʻm. The fee costs you about 5.7 million soʻm, more than half of your original investment. Our guide to compound interest shows why the gap widens each year.

Before investing, ask for every charge in writing: the management fee, any fee for buying or redeeming units, broker commissions and exchange fees.

How to check a fund

1. Check the manager's licence. As of September 2026, trust managers of investment assets and investment intermediaries are licensed by the National Agency of Perspective Projects (NAPP), which publishes a register of professional participants in the securities market on its website, napp.uz. If the manager is not on it, do not invest.
2. Read the investment declaration. Does the asset mix match what you were told? Is the risk section specific?
3. Look for disclosure. Under Article 25, managers publish information about their funds on the websites of the fund or manager, the regulator and the stock exchange. A fund that publishes nothing is a warning sign.
4. Understand how you exit. Does the manager buy units back, and on what terms, or must you sell on the exchange? Our guide to liquidity risk explains why a thinly traded security can be hard to sell at a fair price.
5. Ignore promised returns. No legitimate fund can guarantee a return on a portfolio of shares and bonds.

This article is for education only and is not investment advice. Investing in securities involves risk, including the loss of money you invest.