Mutual funds in a nutshell (brief explanation)


Last Update 3 jaar geleden

What is Mutual Fund?

A mutual fund is a type of investment that is made by pooling the money of several investors and professionally investing it in various types of investments such as Stocks, Bonds, Money Market, among others, each depending on the fund.

How does a mutual fund work?

Mutual funds work by pooling funds from investors. All the money put together is then invested in securities like stocks, bonds, money market instruments, among others. Mutual funds are operated by professional financial managers that control the overall allocation of funds depending on the investment’s objectives.

Benefits of mutual funds:

1. Simplicity

For people with limited investment knowledge, time, or money, mutual funds is the way to go. It is easy, understandable, and it does not require any experience in financial markets to be successful. As long as the investor knows their objectives, mutual funds will work wonders.

2. Professionally managed

Rather than spending thorough research before you buy or sell, you have a fund manager that will handle it for you. Thus, mutual funds allow you to save countless hours of time and energy involved in research and analysis.

3. Diversification

By investing in mutual funds, you enjoy a diversified asset allocation without the need of creating individual portfolios. As such, having a diversified portfolio also entails less risk for investors. 

4. Affordable

While investments may sound intimidating for many Filipinos, investing in mutual funds is actually accessible and affordable. In fact, you can now start investing with only P100! 

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