- Professional management: Mutual funds are managed by individuals or groups who monitor investments continuously and have access to research and resources that most individual investors do not. They are experts in monitoring economic conditions and their impact on the fund's holdings. The experienced professionals work to pursue the fund's objectives in the best interest of the fund's shareholders.
- Diversification: Mutual funds generally increase diversification due to the nature of their multiple holdings. Some mutual funds are more concentrated than others but most will hold dozens, if not hundreds, of investments in a particular asset class or sector.
- Cost: By investing in a fund that pools your money with other shareholders, mutual fund investors are able to obtain diversification less expensively than they are likely to by buying individual securities. Mutual funds do charge management fees but they may turn out to be less than transaction costs for maintaining a diversified portfolio of many individual securities on your own.
- Choice: Whether you and your financial professional determine you would like to invest in stocks, bonds, money market instruments or real estate, there are mutual funds to meet all investment objectives. In many cases, balanced funds, or lifecycle funds, may include investments in a variety of asset classes or styles within a single fund further simplifying your decision.
- Ease of purchase/redemption: Shares of mutual funds can be sold on any day the markets are open. You buy or sell shares based on the net asset value (NAV) established at the close of each day's trading. This liquidity means you don't have to pair with a buyer or seller first to establish the price of your investment. It's also simple to reinvest dividends, transfer funds and set up automatic purchase programs.
- Government regulation: The Securities and Exchange Commission regulates all mutual funds. The SEC requires funds to meet operating standards and disclose complete information to investors. Mutual funds may lose money as there is no guarantee that the investments held within mutual funds will not suffer due to market fluctuations or specific problems related to the companies that are invested in. etc.
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ACME Financial Services
Independent Financial Advisors
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