ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

What Makes Mutual Funds A Good Investment Option?

Updated on February 14, 2012

Mutual Fund Popularity:

Investment choices have been turning lately with a lot of people. The reason behind this is the volatile stock market and a clear way to diversify your income. The most popular way to do this without the direct involvement of the investors is through a mutual fund. There are several reasons why the mutual funds are doing so well

1. No, direct need to sell and buy stocks

2. Managed by a professional investment manager

3. Spreading money across a wide variety of stocks equals diversification

4. Pooling money with other investors allows for bigger returns.

5. Stays in well defined investments according to their prospectus.

Since, 2000, mutual funds have gone through an explosion with more than 23000 different ones now being offered. So, there is a wide variety of risk tolerance as well as diversification within mutual funds.

The Different Categories

Mutual funds are not all free, and there is some money that is taken when you invest in the shares, and on the return. Usually the management fees charged by certain funds are the expenses to operate such a fund. The money goes to paying the fund manager as well as to manage the funds. Sometimes, these fees can be charged in the process of an up front charge when you join the fund or a back end charge when you decide to leave the fund. Some mutual funds do not charge any fees, and these are commonly known as no load funds. These funds are covered with the 12b-1fees.

The main categories of mutual funds you will see are

1. closed end funds

2. exchange traded funds

3. unit investment funds

Each of these types of funds can carry their own fee structure along with the various investments that it provides. But, those are charged and directed by the funds manger.

Securities & Exchange Commission Rules

The Securities and Exchange Commission has made mutual fund rules extraordinarily extensive. They have to adhere to an extremely rigid structure of guidelines. The first act of investment rules was commissioned by the exchange in 1940 under the investment company act. With these rules and regulations in place, it may seem to be a hassle to run a fund, and in some aspects, it is. But, it allows for greater protection of the money that you decide to invest into mutual funds.

Diversification:

The best thing about investing in mutual funds is the ability to put a small or large sum of money into one of them and you are instantly diversified. You can then take other monies and invest further into more mutual funds or other companies if you so wish to do so. Having the diversification available will allow your money to be safer and in the correct places to prevent it from losing value over time. The returns will be greater, and you will be a much happier camper in the end.

Comments

Submit a Comment

  • Hubpage Gal profile image

    Hubpage Gal 

    6 years ago from Phoenix, Arizona

    Great article.

working

This website uses cookies

As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

Show Details
Necessary
HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
LoginThis is necessary to sign in to the HubPages Service.
Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
AkismetThis is used to detect comment spam. (Privacy Policy)
HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
Features
Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
MavenThis supports the Maven widget and search functionality. (Privacy Policy)
Marketing
Google AdSenseThis is an ad network. (Privacy Policy)
Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
Index ExchangeThis is an ad network. (Privacy Policy)
SovrnThis is an ad network. (Privacy Policy)
Facebook AdsThis is an ad network. (Privacy Policy)
Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
AppNexusThis is an ad network. (Privacy Policy)
OpenxThis is an ad network. (Privacy Policy)
Rubicon ProjectThis is an ad network. (Privacy Policy)
TripleLiftThis is an ad network. (Privacy Policy)
Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
Statistics
Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)