Mutual Fund Center This section will provide you with mutual fund information pertaining
to education, portfolio diversification, investment tips, research covering load and no-load mutual fund performance,
MorningStar ratings, category rankings, descriptions, holdings, prospectuses, fund composition, weightings, fees,
expenses, toll-free phone numbers and much more.
Why Invest In Mutual Funds
Mutual funds can be a great way to diversify any portfolio whether you're a beginner or an experienced professional.
For investors with less experience, mutual funds offer a means of investing in the market with the help of a
professional money management firm. Unlike the average individual, firms have the time and resources to research
a wide variety of stocks in many different sectors. Click here
to learn more about mutual funds.
One major reason for investing in mutual funds is to reduce risk through diversification. A heavily concentrated
position can be disastrous if that particular issue falls in price or, worse yet, goes out of business. While diversification
can never guarantee you won't experience losses, establishing numerous positions in different industries can help
reduce the amount of risk in a portfolio. Risk is associated with volatility. If a portfolio tends to be more volatile,
we consider it to have a higher degree of risk. A dilemma individual investors soon face is the lack of capital
to establish a truly diversified portfolio. For example, if you purchased 100 shares of stock at $50.00 for 20
different issues, your cost, not including commissions, would be $100,000.00. On the other hand, a very small initial
investment in a mutual fund allows you to be highly diversified without having to pay multiple commissions. To
further diversify your portfolio, choose a variety of funds. When selecting a diversified portfolio of mutual funds
avoid a common mistake. Don't just pick a few good performing funds, ensure they have different objectives with
different investments. Click here to see how to set up a diversified
mutual fund portfolio.
Another important reason for investing in mutual funds is not having to time the market. There is so much information
available today there may even be too much information. This is known as information overload. Mutual fund managers,
along with their team of analysts, are better able to filter out what news is pertinent and react to it by increasing
or decreasing holdings as they deem necessary. Mutual fund managers actively manage the fund's portfolio according
to market conditions so you don't have to micromanage it yourself. Remember that mutual funds are generally for
long-term investing; they are usually not appropriate for short-term trading.
Even for the most experienced investors, mutual funds can still serve a purpose. With so many investment options
available trying to micro manage ones portfolio down to the company would be a daunting task. Invest in the
companies you know in the sectors you understand. For situations you feel may offer a great investment opportunity
but you avoid due to lack of understanding or the inability to obtain information, consider a mutual fund.
