A mutual fund is a pooled investment that allows a large number of investors to purchase a portion of a fund, which is known as a unit. These assets collected from the investors are then used by a professional money manager to purchase stocks, bonds, and other types of securities. The mutual fund’s investment objective and risk profile will determine the type of securities purchased.
There are many benefits to purchasing a mutual fund. This includes professional management and investment diversification. The investment diversification allows investors to access many different companies such as Google, Telus, Apple, Microsoft, etc. Some funds will focus on specific sectors, while others on geographical areas. Mutual funds allow investors to benefit from a well-diversified portfolio, which would be difficult to create themselves.
The values of a mutual fund may grow through both distributions of dividends, capital gains, or other income. As the values of the underlying investment change, so does the overall value of the fund.
A disadvantage to mutual funds is that they do incur some costs. This includes management fees, administration fees, and taxes.
Credential Asset Management Inc. has access to many of the largest mutual fund providers in Canada. If you have any questions about mutual funds, please contact our PlanWright Financial office and talk to one of our Credential Asset Management Inc. Mutual Funds Investment Specialists.
Mutual funds are offered through Credential Asset Management Inc. Unless otherwise stated, mutual fund securities and cash balances are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer that insures deposits in credit unions. The information contained in this article was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete. This article is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds.