Mutual Fund InvestmentsA mutual fund is basically a type of fund handled by an investment company that sells it as shares and then invests the capital collected in a diverse portfolio of securities. A mutual fund does not merely focus on one type of investment. Its portfolio usually includes a selection of stocks, cash, bonds and other investments vehicles.

Aim of Mutual Funds

Mutual funds usually have objectives that they follow and are laid out on the funds prospectus provided for its investors. It also contains the information pertaining to the mutual fund, its history, the officers as well as its past performance. This prospectus is considered as a legal document aimed to inform its investors what the said fund is all about.

Benefits of Mutual Funds

One of the main benefits of investing in mutual funds is that it leaves investments into the hands of experienced financial experts. The mutual fund usually has a team of analysts and portfolio managers working on it to invest the money in a selection of investment vehicles that would provide the most benefit. This expertise and know how on the market is not usually afforded to most individual investors unless they additionally pay for such a service.

Investors in mutual funds are considered as shareholders since portions of the funds are being sold as shares. Income earned by the fund is usually distributed to its shareholders once a year. In this case, it is usually the shareholders that also take care of the taxes on the fund’s earnings. The capital gains are distributed among the shareholders as a result of selling certain investments.

Regulated Investments

Just like other types of investment options, mutual funds are also being regulated. In this case, investments in such funds are considered safe. But likewise, there might be one hitch. Investments in mutual funds are not guaranteed by the Federal Deposit Insurance Corporation unlike Certificates of Deposits and Money Market Accounts that are insured for a certain amount in case such investments fail.