What is Mutual Fund?
As the name indicates, Mutual Fund is a form of collective investment that allows investors with similar investment objectives to pool their savings. Then, this pool of fund is invested in a portfolio of securities managed by investment professionals also known as fund managers who are hired by the company.
Usually, returns that can be expected out of the investment in mutual fund is a combination of regular income payment (or a distribution/dividend) and capital appreciation.
Sometimes known as Unit Trust, there are various categories currently, including:
- Equity
- Fixed Income
- Money Market
- Real Estate Investment
- Exchage Traded
- Balanced
- Government Sponsored
- Syariah
An investor has various options to invest in a mutual fund which includes:
- Lump sum investment
- Regular savings
- Reinvestment
Before an investor jumps into a unit trust investment, it would be wise for him/her to understand not only the advantages but also the disadvantages related to it.