When you invest in a mutual fund, your money is managed by professional experts. This is one of the primary benefits of investing in mutual funds. Being full-time, high-level investment professionals, a good investment manager is more resourceful and capable of monitoring the companies the mutual fund has invested in, rather than individual investors.
The managers have real-time access to crucial market information and are able to execute trades on the largest and most cost-effective scale. Simply put, they have the know-how to trade in the markets that retail investors may not possess.
A mutual fund enables you to participate in a diversified portfolio for as little as GHC50.00 And with a no-load fund, you pay little or no sales charges to own them.
For example, some bonds and fixed deposits have a minimum investment amount of GHC 250,000. Instead, you can give your money to a mutual fund, which will in turn invest in the bonds and fixed deposits. This could be done for as little as GHC50.00.
Investing in mutual funds has its own convenience. You save up on additional paper work that comes with every transaction, the amount of energy you invest in researching for the stocks, as well as actual market monitoring and conduction of transactions. With a mutual fund, you don’t have to do any of that.
Simply go online or place an order with your broker to buy a mutual fund. Another big advantage is that you can move your funds easily from one fund to another, within a mutual fund family. This allows you to easily rebalance your portfolio to respond to significant fund management or economic changes
In open-ended schemes, you can get your money back at any point in time at the prevailing NAV (Net Asset Value) from the Mutual Fund itself.
This makes mutual fund investments highly liquid. Compare that with a fixed deposit or a bond, which may have a fixed investment duration.
While investing in mutual funds, you are spoilt for choice. You have a number of mutual fund schemes to choose from, which may invest in a whole range of industries and sectors, different kinds of assets, and so on. You can find a mutual fund that matches just about any investment strategy you select.
There are funds that focus on blue-chip stocks, technology stocks, bonds, or a mix of stocks and bonds. In fact, the greatest challenge can be sorting through the variety and picking the best for you.
SEC regulations for mutual funds have made the industry very transparent. You can track the investments that have been made on your behalf to know the sectors and stocks being invested in.
In addition to this, you get regular information on the value of your investment. Mutual funds are mandated to publish the details of their portfolio regularly.