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Introduction to Mutual Funds
A mutual fund offers investors the opportunity to pool their money with other investors in an investment that’s managed by professional investment managers. Mutual funds invest in stocks, bonds or other securities according to each fund’s objective.
FOUR ADVANTAGES OF INVESTING IN MUTUAL FUNDS
Investors turn to a mutual fund because of four distinct advantages they may offer over investing in individual securities.
1. Professional Management — A mutual fund offers investors access to full-time, professional money managers who have the expertise, experience and resources to actively buy, sell, and monitor investments.
2. Diversification — Buying shares in a mutual fund is an easy way to diversify your investments across many securities, which is just another way of saying that you won't have all your eggs in one basket. If one investment decreases in value, another investment in the portfolio may increase.
3. Affordability — For many people, it would be more costly to purchase directly all of the individual securities held by a single mutual fund. By contrast, the minimum initial investments for most mutual funds are more affordable.
4. Liquidity — Most mutual funds allow you to sell your fund shares on any day the stock markets are open, so you have easy access to your shares, when redeemed, may be worth more or less than their original cost.
TYPES OF MUTUAL FUNDS
Mutual funds come in many varieties, designed to meet different investor goals. Most of Franklin Templeton’s mutual funds fall into one of four main asset classes:
Equity Funds
Invest primarily in stocks and may focus on certain sectors of the market or may have a specific investment style.
Fixed Income Funds
Invest primarily in bonds or other debt securities, and offer investors the potential for income generation and capital preservation.
Multi-Asset Funds
Offer exposure to a broad number of asset classes, often offering a level of diversification typically associated with institutional investing.
Alternative Funds
Invest in a variety of strategies and asset classes, and offer the potential to reduce volatility and improve portfolio returns.
HOW TO INVEST IN MUTUAL FUNDS
Franklin Templeton mutual funds are available to buy through financial advisers because we believe investors can benefit from ongoing professional advice.
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