What Is a Mutual Fund?

Back in 1924, most Americans couldn't afford to buy individual stocks. Investing was reserved for institutions or the extraordinarily wealthy – until a new investment called a "mutual fund" was invented. Mutual funds offered investors the opportunity to group their money together and buy stocks, bonds and other investments "mutually."

Diversification

Diversification means not having too many eggs in one basket. Because mutual funds hold many investments, they can be diversified by: 

  • Type of investment (i.e., stocks or bonds)
  • Size of the companies
  • Industry
  • Country or countries  

Professional management

Fund managers have extensive knowledge that helps them make investment decisions. A manager may adjust the portfolio mix based on changes in market conditions or a company's performance to help the fund achieve its stated objective.

Convenience

In addition to diversification and full‐time professional management, mutual funds offer convenience in several other ways, such as:
  • A low minimum investment amount
  • The ability to buy or sell on any business day
  • Free exchanges of funds within the fund family
  • Various funds with objectives for almost any investment need
  • Free automatic reinvestment of dividends and capital gains

How we can help

Because of these benefits, mutual funds are a popular way to invest. Mutual funds usually cost more than buying stocks individually because of sales charges and annual fees. You generally pay for the outside professional management and broad diversification that can be difficult to achieve otherwise – especially if you don't have a lot of money to invest at one time.

With more than 8,000 mutual funds on the market today, we understand it can be difficult to know which funds to choose. With more than $400 billion in mutual fund assets under care, Edward Jones dedicates significant resources to identify suitable mutual funds for our clients. The analysts within our Mutual Fund Research Department hold face‐to‐face meetings and visit multiple fund companies on site to gain a deep understanding of the fund managers, their philosophy and processes.

Work with your Edward Jones financial advisor to select quality investments that are appropriate for your needs and long‐term financial goals.

Important Information:

Mutual fund investing involves risk. Your principal and investment return in a mutual fund will fluctuate in value. Your investment, when redeemed, may be worth more or less than the original cost.

Edward Jones receives payments known as revenue sharing from certain mutual fund companies, 529 plan program managers and insurance companies (collectively referred to as “product partners”). For more information see Revenue Sharing Disclosure.

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