Mutual Funds: A Popular Investment Choice
A mutual fund is a company that makes investments on behalf of individuals and institutions who pool their money to achieve a common financial goal. The fund may invest in the
stocks, bonds and/or money market instruments of a variety of companies, institutions and/or government agencies. These securities compose the fund’s portfolio. The mutual fund
company sells shares of this portfolio, representing ownership, to investors, who then share in the profits or losses of the fund’s investments.
Mutual funds offer the following benefits:
- Diversification: Since a mutual fund typically invests in a variety of companies, industries and geographic areas, the risk of “putting all your eggs in one basket” may be reduced.
- Professional Management: Securities selection and buy and sell decisions are handled by the fund’s managers, who are professionals with expertise in a variety of investment disciplines.
Liquidity: By law, every mutual fund must stand ready on any business day to redeem any or all of its shareholders’
investments. Mutual fund investors may cash in all or part of their shares at any time, and receive the current value of their investment which may be more or less than the original cost.
Current per-share value, known as net asset value (NAV) is determined by subtracting the fund’s liabilities from its assets, and dividing the remainder by the number of shares
outstanding. The NAV for each fund is calculated daily after the market closes and published in the financial section of many major newspapers.
- Flexibility: Many fund companies offer a family of funds composed of several different mutual funds with varying objectives. Investors generally enjoy an exchange privilege
allowing them to transfer portions of their investments into other funds within the family as their needs change. Most mutual funds also offer automatic reinvestment or withdrawal
of dividends and capital gains.
- Simplicity: Minimum initial mutual fund investments can be as low as $500 and subsequent investments as low as $25, putting the possibility of starting an investment program within
reach for many individuals.
When it comes to selecting a mutual fund, investors have literally thousands of choices. And each fund may offer multiple classes of shares, such as Class A shares, Class B shares,
Class C shares, etc. Each class has different fees and expenses. The class that may be best-suited to your investment objectives may depend on several variables, such as the amount
you plan to invest and your investment time-frame. It is important to request and read the prospectus for every mutual fund you are considering. The prospectus describes the mutual
fund and contains information about the fund’s objectives, risks, performance and costs.
The table below provides an overview of some of the most common types of mutual funds:
Many investors are overwhelmed by the task of researching and evaluating the multitude of investment options available. Your Legend Advisor can help you select appropriate
investments based on your objectives and tolerance for risk.
Diversification does not assure a profit or protect against market loss.
An investment in a money market fund is neither insured nor guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Yields will fluctuate, and although the fund seeks to preserve the value of your investment as $1.00 per share, it is possible to lose money by investing in the fund.
Before investing in a mutual fund, consider its investment objectives, risks, charges and expenses carefully. The prospectus, which contains this and other information about the mutual fund, can be obtained by contacting Legend Equities Corporation. Please read the prospectus carefully before you invest or send money.