US Capital Markets

Table of Contents

Advantages of Investing in Mutual Funds

Mutual funds are a comfortable tool for investing in the market, and their success rises from the many advantages they offer the investor:

  1. Diversification

    A mutual fund invests in tens or hundreds of stock in the sector it focuses on.

  2. Professional Management

    Experienced investment managers, working with large professional staffs, manage mutual funds.

  3. Cost Saving

    Due to heavy competition over the past few decades, the costs involved with investing in mutual funds have dropped tremendously.  For most investors, mutual funds are the cheapest way to gain professional asset management. This topic will be explained further in this chapter.

  4. Wide Variety of Investment Styles and Options

    The large number of funds available allows an investor to pick one that specifically meets his demands.  For every style of investment, beginning with stock funds that specialize in specific sectors, and ending with bond funds that focus on specific bond types, an appropriate fund can be found. In addition, if the investor is ever interested in changing his investment strategy, he can do that easily by switching from one fund to another.  This is far easier than buying and selling dozens of securities in a privately managed portfolio.

  5. User Friendly

    From a technical standpoint, investing in mutual funds is very easy.  Buying and selling shares of a fund can be done through bank tellers, brokers, and the mutual fund companies themselves. These transactions can be made via telephone, Internet or mail.  As well, most funds supply their investors with up-to-date information, all day long.

  6. Low Entry

    For most funds, the minimal purchase to enter the fund is less than $1,000.  This is opposed to other financial tools, such as hedge funds, whose minimal purchase can range from $250,000 to over a million.

  7. High Liquidity

    Investments in mutual funds are very liquid. The law mandates that mutual funds allow their investors to redeem shares on any trading day.

  8. Regular Information

    The share price is published at the end of every trading day.