What is a mutual fund?
Simply put, a mutual fund invests in a group of stocks, bonds, or other investments selected by a professional fund manager. The team managing a fund:
- has experience selecting investments, and
- manages buy-and-sell decisions so you don't have to.
How do mutual funds work?
When you buy units of a mutual fund, you're pooling your money with other investors. If you're a small investor, this lets you have a much wider mix of investments than you could on your own.
Why invest in mutual funds?
Mutual funds are simple to buy and often have a low minimum investment. They can give you an easy way to diversify your portfolio. That means including variety – a mixture – in your collection of investments.
What is a diversified portfolio, and why is it important?
A diversified portfolio includes various types of investments, like stocks, bonds and cash. Investments may react differently to the same economic event, for example, higher inflation.
Over time, some investments will increase in value, while others will decrease. So, having a mix of investments can help you minimize risk and potentially achieve better results.
What are the main types of mutual funds?
The three main types of mutual funds are:
- equity funds, that invest primarily in a variety of different kinds of stocks;
- fixed income funds, that invest primarily in bonds; and
- balanced funds, that invest in a mix of stocks, bonds and similar investments.
There are many different categories of mutual funds to choose. Some invest in certain industries, others in certain countries, while still others invest more widely.
Find more tips and tools at sunlife.ca.
Investing in a mutual fund can be an effective way to save for important goals.
What is a mutual fund?
Simply put, a mutual fund invests in a group of stocks, bonds, or other investments selected by a professional fund manager. A fund manager is someone who:
- has experience selecting investments, and
- manages buy-and-sell decisions so you don't have to.
How do mutual funds work?
When you buy units of a mutual fund, you're pooling your money with other investors. If you're a small investor, this lets you have a much wider mix of investments than you could on your own.
- Find answers to commonly asked questions about mutual funds in our FAQ.
Why invest in mutual funds?
Mutual funds are simple to buy and often have a low minimum investment. They can give you an easy way to diversify your portfolio.
What is a diversified portfolio and why is it important?
A diversified portfolio includes various types of investments. These investments may react differently to the same economic event. The value of one may rise while the value of another may fall.
In any given period, you can offset losses from one type of investment by gains in another. So having a diversified portfolio can help you minimize risk and potentially achieve better results.
What are the main types of mutual funds?
The three main types of mutual funds are:
- equity funds, that invest primarily in a variety of different kinds of stocks;
- fixed income funds, that invest primarily in bonds; and
- asset allocation, or balanced funds, that invest in a mix of stocks, bonds and similar investments.
There are many different categories of mutual funds to choose. Some invest in certain industries, others in certain countries, while still others invest more widely.
Need help getting started?
A Sun Life Financial advisor can help you choose the right type of mutual funds for you based on your risk tolerance, time horizon, and financial goals.
Watch more from the Simply Put video series:
