Mutual Funds: What Are They?
I received numerous comments and emails regarding Mutual Funds because of my previous article regarding similar pooled fund – UITF or Unit Investment Trust Fund.
I’m recommending investing to pooled funds like UITF or MF for OFW’s and for people who don’t have time to monitor their investments. To answer one of the reader who sent me an email, I want to know more regarding Mutual Funds, Can you explain it to me?
DEFINITION of ‘Mutual Fund’
an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Mutual funds are operated by money managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus. (Source: Investopedia)
Investment Company pools money from numerous investors and in exchange, issues corresponding shares to the latter. Pooled funds (e.g UITF and MF) are then invested by professional fund managers in various securities according to the investment objectives and policies of the fund. You can also read my previous post What is UITF?
The investment is directed at increasing the value of the fund and consequently, the value of the shares of its investors.
There are no guarantees, but its growth potential is limitless.
Some of the Advantages of Investing in Mutual Funds
–Professional Fund Managers -Investors will enjoy the expertise of Fund Managers who have the research capabilities, skills, knowledge, experience to be able to yield the best possible returns to the fund and its shareholders.
–Affordable -You can start investing for as low as P5, 000; and enjoy the benefits of mutual funds.
One of my favorite advantage is..
– Diversification – mutual fund investments are spread across a wide range of companies and industry sectors which lowers your risk if a company or sector performs badly
Where to Invest?
I recommend to study MF’s and other financial vehicles further before deciding to invest. Never invest in anything unless you fully understand it.
I’ll write more regarding MF, watch out for my next post.
Below is the YTD performance of some MF:
Disclaimer: Past performance is not a guarantee of future performance.
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To all readers, I apologize for the late post, we are experiencing technical difficulties for the past 20+ days already – no phone line and internet from PLDT (I will shoot an email to NTC shortly)