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Mutual Funds

What is mutual fund?

Mutual fund is like a pool of money from investors that will be managed by a professional investor called fund manager. In other words, mutual fund is a collection of investments, such as bonds, stocks, and other funds owned by a group of investors and managed by fund

managers.


How do mutual funds work?

Mutual funds pool money from investors and fund managers will use it to buy investment instruments. When the securities generate profits, fund managers will pass it back to the investors.


Types of mutual funds

· Money Market Funds Consist of short-term debt securities which are safer but have lower potential return.

· Fixed-Income Funds Invest in debt securities with specified interest rate.

· Equity Funds Invest primarily in stocks.

· Hybrid Funds A mix investment of stocks, bonds, and other securities.


What is mutual fund fact sheet?

Mutual fund fact sheet is a detailed summary that covers basic information and an overview of the mutual fund. It allows even beginner investors to be well informed about their own investment.


What are the advantages of buying mutual funds?

· Professional management Fund managers are experienced, professional and experts in their field.

· Diversification It can reduce the impact of the performance of any one security to the entire portfolio.

· Liquidity Investors are able to sell their mutual fund immediately in a short period of time.



Sources:

Investopedia

Wall Street Survivor

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