Fondtesoros are a special category of mutual funds that hold most of their assets in Treasury securities. They accordingly give the investor (unitholder) an indirect route into Treasury securities: instead of holding them directly, the investor owns units in a mutual fund which in turn holds Treasury securities in its portfolio.

They are promoted and managed by selected management companies bound under an agreement with Tesoro Público to fulfil certain specifications. In particular, they must hold a given percentage of their assets in Treasury securities, keep fees and loads within a specified ceiling amount, and not demand too high an initial investment from their unitholders. In exchange, they are authorised to use the Fondtesoro brand name and get the advertising support of Tesoro Público.

Fondtesoros do not distribute portfolio returns among their unitholders but reinvest them in the fund itself. Therefore, unitholders are not taxed until they sell their investment (see Advantages of Fondtesoros).

Fondtesoro investment is open to all members of the public willing and able to make the minimum entry investment. This minimum may be no more than 300 euros, though in practice, management companies have set lower thresholds for most of their Fondtesoro products.

The main advantage of mutual funds is the liquidity they offer: unitholders can withdraw all or part of their holdings any time they wish, by means of a redemption order to the management company. Managers must meet all such requests within a maximum of seventy-two hours, although the time taken is usually less. To ensure the liquidity is permanently on hand to meet redemption orders, management companies must keep part of the fund’s assets in cash. Investors wishing to redeem more than €300,506.05 may have to give the manager ten days’ notice.

Fondtesoros are also a safe investment. Firstly, because they hold most of their assets in Treasury securities and, secondly, because management companies come under the supervision of the securities market regulator, the Comisión Nacional del Mercado de Valores. Moreover, Tesoro Público makes regular checks that its agreements with these companies are being fully complied with as regards portfolio composition, fees, investor information, etc.

Fondtesoro investment has the added attraction of competitive fees that are protected by agreement (see Fees).