Mutual Funds

Welcome....

To The Mutual Funds page

In this page we will discuss mutual funds, what they are, how they can benefit you, how you can use them as part of your portfolio, the pros and cons of mutual funds, and some of the more popular mutual funds available.

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So what is a mutual Fund?

Well firstly there are many different and varying mutual funds so we will focus on Australian Mutual Funds as we are primarily an australian website

For American mutual fund information click her

For UK information click here.

Avording to investorwords.com a mutual fund by definition is.. An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets, in accordance with a stated set of objectives. Mutual funds raise money by selling shares of the fund to the public, much like any other type of company can sell stock in itself to the public. Mutual funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds and money market instruments. In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund. Benefits of mutual funds include diversification and professional money management. Mutual funds offer choice, liquidity, and convenience, but charge fees and often require a minimum investment. A closed-end fund is often incorrectly referred to as a mutual fund, but is actually an investment trust. There are many types of mutual funds, including aggressive growth fund, asset allocation fund, balanced fund, blend fund, bond fund, capital appreciation fund, clone fund, closed fund, crossover fund, equity fund, fund of funds, global fund, growth fund, growth and income fund, hedge fund, income fund, index fund, international fund, money market fund, municipal bond fund, prime rate fund, regional fund, sector fund, specialty fund, stock fund, and tax-free bond fund.

So basically a mutual fund is a collection of peoples money which is invested on behalf of the investors by an investment manager or managers.

Generally the fund manager utilizes a portfolio management strategy where the manager or company collective, makes specific investment decisions with the goal of outperforming the main index. Often the All Ords or ASX200. Often returns are nothing special however in this form of investment they are normally a fairly safe investment.

If for example the main stock market index falls 8% but the performance of the mutual fund is say -6% this would be deemed a good result as they have out performed the index..

The pros and cons of Mutual Funds

Generally speaking mutual funds or managed funds are a great investment to take up part of your portfolio or if you are yourself not an active investor you can leave all your money in the hands of the portfolio manager.

So why chose a mutual fund as an investment. Well basically your money will be managed by experts on your behalf in the chosen risk category that you desire, all the while you don't have to lift a finger.

So if you would like someone else who is an expert in the field to look after your money you have all your time freed up. Of cousrse tjis also means that you don't have full control of your money.

One of the main downsides to mutual funds is that often the returns expected are very average. generally much better returns can be had with plenty of research and time. But that is the crux. You are trading time for money..

Some of the Australian Mutual Funds Managers Available

There are today literally hundreds of fund managers available for you to choose from and we are not going to list all of them here. A quick search on google is bound to find the many varying fund managers available.

There is a huge list of fund managers available by searching at www.afsd.com.au