Mutual Fund Investing

Investing - Mutual Funds Investing

When investing into mutual funds, the capital that you decide to trade will be pooled together with other investors into one large pot. One of OBU Group’s professional managers will then invest the money as a whole into a diverse range of assets, including bonds, commodities, stocks, and sometimes real estate. An investor would purchase shares into the mutual fund, and based on the capital that is invested, that will represent the ownership percentage of the assets that are owned by the Mutual Fund. Mutual funds are often designed for investors who are looking at long term holdings, and are not created to be traded in and out of frequently.

Mutual funds are usually favored by experienced investors for their diverse holdings, which in turn means a more diversified portfolio. Diversification within your own portfolio is used as a tool to minimize exposure and risk to your capital. Mutual funds can vary greatly in the amount of holdings they have, some may have ten, some may have ten thousand, and a key factor that gives mutual funds a benefit is the fact that the majority of holdings are liquid, meaning for investors it is easy to purchase and sell shares in Mutual funds.

Trading Mutual funds has a different mechanic to that of trading stocks and ETF’s. Unlike stocks and ETF’s which can trade at any point during the daily trade session, Mutual Funds only trade once per day after the closing bell. The price of shares in a mutual fund, is generated based on the asset value calculated after the end of a day’s trading session. This differs from ETF’s and Stocks, where prices of the holdings can vary greatly throughout the day’s trading. When investing in mutual funds, you are purchasing shares directly from the fund, and not buying shares directly from the company in which you are invested in.

Reasons to incorporate Mutual Fund’s into your portfolio:

  • Building a diverse portfolio
  • Index fund investing
  • Long Term holding
  • Liquid investments, for ease of trading
  • Great for all levels of Investor experience
  • Managed by experienced professionals
Market Summary