A mutual fund is an investment security that allows people to pool their resources into professionally managed portfolios of stock funds, bond funds or both. BetterInvesting will help you discover which mutual funds might be right for you by providing the information you need to make the right decision.
Before you begin, here's a quick breakdown of the language you'll encounter in the world of mutual funds that will let you better understand how they work.
Open-End Funds — Most funds you'll be investing in are what are known as open-end funds, which means that the fund continually issues new shares to anyone willing to buy. Shares of open-end funds have a value that reflects what the securities in the portfolio are worth at any given time.
Closed - End Funds — Closed-end funds issue a fixed number of shares and are traded like common stock. That means that they can actually trade at a higher or lower price than the actual value of the fund's holdings.
Stock Funds — Every Stock Fund has its own investment style that is based on the philosophy of the fund manager.
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There are three basic investment styles:
- Growth—Investing in companies with rising sales and earnings
- Value—Investing in companies that are currently trading at a discount
- Blend—Investing in both growth and value companies
Bond Funds — Bond funds invest in many different bonds. A bond is a promissory note between two parties. Basically, an investor loans money to a corporation or government in exchange for interest payments and the eventual return of the original investment.
The Pros and Cons: A Quick Overview
Here's a very quick look at the advantages and risks involved in mutual fund investing.
| Pros: | Cons: |
| Diversification | Over-diversification |
| Professional Management | Fees |
| Convenience | Tax Liability |
| Choice | Sales Charges |
| Liquidity | Under performance |
| Information | No government guarantee |
| SEC Protection | |
Once you've decided that mutual fund investing is going to be part of your financial future, BetterInvesting has a wealth of information available to help you choose the mutual funds that are right for you.
Mutual Fund Resource Center
As a member of BetterInvesting, one of the best tools at your disposal is the Mutual Fund Resource Center. All of the BetterInvesting mutual fund analysis tools and Standard and Poor's data on over 17,000 mutual funds are at your fingertips.
Just enter a fund ticker symbol and a completed form is displayed and ready for your review. And BetterInvesting will help you understand what you're looking at on the form so you can find what you're looking for in an investment.
The resource center includes all of this and more:- University - provides 45 lessons on the basics of mutual fund investing
- Library - access to hundreds of articles ranging from the basics of investing to in-depth analysis of mutual funds and stocks
- Education on BetterInvesting's mutual fund tools built into each tool
- Check List - to analyze an individual fund
- Comparison Guide - to find the fund best for you
- Trend Report - for analyzing and monitoring a fund over time
- Screening Tool - helps you narrow the field
- Direct access to Standard & Poor's data on over 17,000 stock, bond, international, global, asset allocation, sector, money market, convertible and exchange-traded funds.
- Access to Standard & Poor's Mutual Fund Reports for all funds, containing 4 pages of fund analysis in PDF and HTML format
- Complete monthly or quarterly holdings updates on over 90% of all funds in the mutual fund database
- Expanded holdings and sector analysis on stock funds
- Portfolio Manager software users automatically access data to drill down into fund holdings for true asset allocation analysis
