Mutual Funds
Description
Mutual funds are a simple, flexible and affordable way to invest over the medium to long term. When you put money into a mutual fund, it is pooled with money from other investors who have similar investment goals. The day-to-day decisions are made for you by experienced professional fund managers. In return for a fixed monthly payment or a lump sum, they can give you access to the stock market's growth potential while reducing the risk involved.
Objective
Mutual funds suit a wide variety of investment needs, whether you seek income, growth or both.
- Income: If you want a steady income, fixed income mutual funds which normally buy into a diversified portfolio of bonds may be appropriate for you.
- Growth and income: Growth and Income mutual funds typically invest in good quality 'blue chip' companies that offer an attractive dividend. They provide a lower initial income that should rise over time, together with the potential for long-term capital growth.
- Growth: Share mutual funds offer a diversified way of investing in the share market. Professional fund managers invest in the shares of those companies which they consider likely to show good growth over the medium to long term.
Suitability
Mutual funds are suited for medium to long term investors.
Features
Diversity: Mutual fund managers invest in a wide range of securities, companies, industries, countries and regions.
This spreading of investments, or diversification, helps to even out the ups and downs of the market. The aim is to minimise risk by balancing losses from some investments with gains in others. This is important, as no single investment performs well under all market and economic conditions.
- Professional fund management: Investments in mutual funds are chosen and monitored by professional fund managers. Their market knowledge is extensive and they are constantly researching changing conditions in individual sectors and the overall economy.
No one is infallible but fund managers have access to better information than most armchair investors - and information is the key to making sound investments.
- Accessibility: Easy access to your money is a key feature of mutual funds. They allow you to sell any or all of your investments on any business day. As their values rise and fall, you may get back more or less than your original investment.
OUR PREFERRED PROVIDERS
- Britannic Asset Management
- Capital International
- Newton Fund Managers
- Standard Life Investments
- Threadneedle Investments
MUTUAL FUND INVESTMENT STRATEGY
Systematic Investing
One way to potentially build a mutual fund portfolio is through a programme called, Pound Cost Averaging, which is a regular and disciplined investment programme. If you invest the same amount each month into the same fund, you buy fewer shares when the price is high and more shares when the price is low; helping to even out the ups and downs of the stock market.
Important Information: Although Pound Cost Averaging does not guarantee a gain and does not prevent a loss in declining markets. It ensures you won't invest all your money at a market high. Pound cost averaging depends on investing over the long term. You should evaluate your financial ability to continue investing through good and bad markets during your planned time period.
For more information, please contact your Edward Jones financial adviser.
