WHY MUTUAL FUNDS?

Mutual funds allow investors to reap the benefits of asset allocation and diversification within a broader portfolio of investments.

Mutual funds pool money from a large number of investors, to provide you with greater flexibility than you could otherwise access by investing directly in individual stocks, bonds or cash investments. They can invest in a single asset class, or a combination of the three - stocks, fixed income and cash - depending on the fund's objective. This gives you exposure to a larger, more diverse selection of investments.

DIVERSIFICATION

Spreading your investments among the three asset classes is only the first step in ensuring strong investment returns. Another key strategy for successful investing is diversifying your investments among different markets, countries, industries, and companies. Not only does this "diversification" allow you to bring a wide range of investment opportunities into your portfolio, but it also eliminates the risk of tying all of your savings to a single investment or market. As an individual investor, it is difficult to diversify investments as easily or inexpensively as you can when purchasing mutual funds, which typically hold a large number of diverse investments within their portfolios.

PROFESSIONAL INVESTMENT MANAGEMENT

Mutual funds offer investors access to professional money management. Investment management is a full-time job, requiring specialized knowledge and training. It involves regular analysis of economies, industries, companies, political events and policies. When you contribute to a mutual fund, professional fund managers are responsible for investing your money according to a stated set of investment objectives. For instance, some mutual funds focus on growth and invest in domestic or foreign equities. Other funds concentrate on the preservation of capital and the generation of income and invest primarily in fixed income securities such as bonds. No matter what type of mutual fund you purchase, the fund's managers continually monitor its portfolio to ensure its investment objectives are met and that the fund complies with its investment mandate.