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The concept of mutual funds as an efficient means of investment was developed over 75 years ago. The well-recognized benefits, which have been appreciated by many investors, are:
• Convenience – Mutual fund investments can be bought or redeemed any day for any amount.
• Reporting – Mutual funds provide simple and accurate accounting for the portfolio. Year-end tax preparation is made easy for your accountant.
• Professional Investment Management – Like other professionals, investment managers have become very specialized so as to deal with the myriad of asset classes, industries and specific securities available in Canada and the global markets.
• Diversification – The typical mutual fund holds a wider range of investments than you could possibly hold on your own. This reduces the overall risk of investing by spreading it out.
• Access to Certain Markets – Mutual funds make it practicable to invest in markets that you could not realistically do with individual securities (e.g. foreign markets, new issues and small capitalization companies).
We believe that there are other significant benefits, which are not so well understood:
• Economical Portfolio Transaction Costs – Due to the fact that there are thousands of unit holders in a particular fund, there are normally many purchasers and redeemers each day. The portfolio manager only has to buy or sell in the stock and bond markets the net amount of all of these unit holder transactions. Also, because of the size ("clout") and the professional classification of the investment orders given to the stockbrokers, the commission cost is much lower (as a percentage of the transaction amount) than would be the case for the transaction placed for your own account with a stockbroker.
• Superior Investment Performance – The portfolio manager’s motivation is to do well for the mutual fund portfolio since this (a) is the publicly visible record which can enhance the firm’s asset gathering efforts, and (b) will be reflected in the portfolio manager’s annual compensation through bonuses, etc.
Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.