Investors seeking an affordable way to diversify their portfolios should consider the convenience of mutual funds.Mutual funds provide investors with a professionally managed investment typically comprising a combination of stocks and bonds. Within each of these categories, there are multiple investment styles and asset classes, enabling you to build a diversified investment portfolio to help meet your financial goals.
By purchasing shares in a variety of companies, mutual funds can help reduce company risk and volatility. A well-rounded portfolio may include a number of different types of mutual funds. Working with your financial advisor, you can devise a mutual fund investment strategy that is suited to your needs, bearing in mind your time horizon and ability to withstand fluctuation in the value of your portfolio.
Features of mutual fund investing include:
• Professional management: While there are mutual funds designed to simply mimic unmanaged indices such as the S&P 500, most mutual funds are run by investment companies that hire professional money managers to direct the funds. These money managers continually analyze the markets and economy to decide which securities to buy and sell.
• Diversified portfolio: A mutual fund invests in a range of securities. A typical stock fund, for example, might own shares in more than 100 companies. You can get added diversification by buying several different funds with different investment styles. However, it is important to research a mutual fund thoroughly before deciding to invest: some individual funds are not diversified, and owning multiple funds does not necessarily guarantee diversification.
• Low minimum investments: Most mutual funds have low minimum investments, making them affordable and allowing you to make regular contributions. For most funds, initial investments range from $500 to $3,000. Additional purchases usually can be made in
smaller amounts, sometimes as little as $25 to $100, often by directly debiting a checking or
• A variety of investment styles available: Mutual funds are available in many different investment styles. Stock funds, for example, range from highly specialized, small- capitalization stocks in a particular sector to large-capitalization growth and income stocks. While bond funds are available in two main categories – taxable and tax-free – they also can be further diversified with holdings of varying duration and credit quality.
Whether your financial goals require growth, income or a combination of both, your financial advisor can help you build and manage a mutual fund portfolio suited to your investment goals.
Please carefully consider the objectives, risks, charges and expenses of any mutual fund before investing. This and other information can be found in the prospectus and summary prospectus, which is typically available through a fund company’s website or your financial advisor. Prospectuses or summary prospectuses should be read carefully before investing.
Article provided by Robert W. Baird & Co. with the authorization of its author for Evan Guido, Vice President, Financial Advisor at the Sarasota office of Robert W. Baird & Co., member SIPC. The opinions expressed are subject to change, are not a complete analysis of every material fact and the information is not guaranteed to be accurate.
Evan R. Guido
Vice President of
Private Wealth Management
One Sarasota Tower, Suite 806
Two North Tamiami Trail
Sarasota, FL 34236-4702
941-906-2829 Direct Line
888 366-6603 Toll Free
941 366-6193 Fax
Got a question? Ask Guido!
No comments on this item
Only paid subscribers can comment
Please log in to comment by clicking here.