If you are new to investing, you may be feeling overwhelmed at the amount of knowledge and research required to assemble a well-balanced portfolio. You have to assess what type of investor you are, what your investment objectives are, and build an investment portfolio that fits within these parameters. You must then rebalance your portfolio periodically, making the necessary changes to keep your investments on track.
Many investors feel that they are unable or unwilling to commit the time that is required to successfully build and maintain their own portfolio. For those investors mutual funds may be the answer. You may be wondering what are mutual funds and how are they managed? By learning what these investment tools are, you can better learn how to utilize these funds to grow and preserve your capital.
Whether you are looking to build a portfolio of mutual funds, or simply looking for a sector-specific fund to round out your existing portfolio, online broker ETrade offers thousands of mutual funds to choose from. With comprehensive fund screeners, and access to professional financial advisers, you can be better positioned to find the mutual fund that is right for you.
What Are Mutual Funds And How Are They Managed?
What are mutual funds and how are they managed? A mutual fund is an investment company that pools investors’ funds to invest in stocks, bonds and other financial securities on the behalf of its investors. When you invest in a mutual fund you are provided with investment management services that you may not have access to as an individual investor.
A mutual fund is created by a fund sponsor, and employ a corporate structure with a board of directors. These funds also hire an investment adviser to manage the funds investments. The fund manager invests portions of the fund into specific stocks, doing all of the required research and stock trading.
As a private investor in a mutual fund, the only time you have to actively trade is when you initially purchase shares in the fund. You can leave these investments to accumulate over the long-term with the goal of realizing significant capital growth.
A fund’s manager can be one of the most important aspects to consider when researching mutual funds. When you use the comprehensive mutual fund screener at online broker ETrade, you have access to all of the pertinent information on your potential mutual fund investment, including manager tenure and the historical performance of the fund.
The Benefits Of Investing In Mutual Funds
What are mutual funds and how are they managed? There are several benefits to investing in mutual funds with the major benefit being that they are simple to invest in. These investment tools are ideal for people who want to invest and grow their funds in the stock market, but may lack the experience or time to trade for maximum realized gains.
As the investment decisions are left up to the fund’s manager, the fund’s investment objectives are set out clearly to the investor before they invest any capital in the fund. The fund’s manager must adhere to these parameters, and may not introduce any unknown risk into the fund’s holdings.
When you pool your money and invest it across a broad rage of securities and asset classes you reduce your risks from trading individual securities. An investor can have confidence that their investments are diversified across many different securities, and therefore shielded from an individual stock’s falling price.
Consult with a financial adviser, such as the investment specialists at industry leader ETrade, to find out is mutual funds are right for you and your unique investment objective.
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