Mutual Funds in General. A mutual fund is a pool of money invested for you and other shareholders by an investment company in a variety of instruments, such as stocks, bonds, or government securities. Individual investors own shares of the mutual fund, while the fund (or investment company) owns the underlying investments selected by the fund’s investment manager. A mutual fund share is a security that is offered for sale through a prospectus. First and foremost, before investing in a mutual fund, you should read the fund’s prospectus carefully. Each mutual fund is different in its make-up and philosophy. As an investor, you should look for funds with objectives and risk levels that match yours. Some key factors to consider include a mutual fund’s investment strategy, risk profile, investment performance, and relation- ship to your overall asset allocation strategy and investment time horizon. A mutual fund’s fees and expenses have an impact on its investment returns and are also important factors. All mutual funds, including “no-load” funds, incur transaction costs, expenses, and other fees which are passed through by the mutual fund and ultimately paid by the fund shareholders. This and other important information can be found in the fund’s prospectus, or in other information as may be requested or obtained from the fund, such as the fund’s Statement of Additional Information (SAI). If you are interested in a diversified mutual fund covering a single class of investments (stocks, bonds, etc.), there are many broad-based funds that invest in a wide variety of securities covering various industries or sectors. If you prefer to focus on particular industries, you might consider sector funds that invest in a particular industry sector, but which provide less diversification. Mutual funds are also a way to invest in foreign stocks. Mutual funds have varying strategies, including the level of diversification. Some funds own hundreds of different securities, while others may own only a few dozen. The two most common types of mutual funds are equity funds that invest primarily in common stocks and fixed income funds or “bond funds” that typically invest in bonds or money market securities. Less common are “balanced funds” that invest in both equity and debt. Most mutual funds require a minimum initial investment, sometimes as low as $250. Mutual fund shares fluctuate in value, rising and falling in price depending on the perfor- xxxxx of the underlying securities in the fund. The Net As...
Mutual Funds in General. A mutual fund is a pool of money invested for you and other shareholders by an investment company in a variety of instruments, such as stocks, bonds, or government securities. Individual investors own shares of the mutual fund, while the fund (or investment company) owns the underlying investments selected by the fund’s investment manager. A mutual fund share is a security that is offered for sale through a prospectus. First and foremost, before investing in a mutual fund, you should read the fund’s prospectus carefully. Each mutual fund is different in its make-up and philosophy. As an investor, you should look for funds with objectives and risk levels that match yours. Some key factors to consider include a mutual fund’s investment strategy, risk profile, investment performance, and relation- ship to your overall asset allocation strategy and investment time horizon. A mutual fund’s fees and expenses have an impact on its investment returns and are also important
