Mutual Funds: Conclusion
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Let's recap what we've learned in this tutorial:
- A mutual fund brings together a group of people and invests their money in stocks, bonds, and other securities.
- The advantages of mutuals are professional management, diversification, economies of scale, simplicity and liquidity.
- The disadvantages of mutuals are high costs, over-diversification, possible tax consequences, and the inability of management to guarantee a superior return.
- There are many, many types of mutual funds. You can classify funds based on asset class, investing strategy, region, etc.
- Mutual funds have lots of costs.
- Costs can be broken down into ongoing fees (represented by the expense ratio) and transaction fees (loads).
- The biggest problems with mutual funds are their costs and fees.
- Mutual funds are easy to buy and sell. You can either buy them directly from the fund company or through a third party.
- Mutual fund ads can be very deceiving.
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Investopedia Staff
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