For the typical mutual fund buyer, the investment is not something that happens once and is then forgotten. He or she usually wants to invest a set dollar amount into the fund every month. Consequently, with the offering price changing daily, she might be able to buy 10 shares one month, not quite 11 shares the following, nine the month after that, and so on.

What is Dollar Cost Averaging?
Mutual funds typically allow for fractional share ownership for the dollar-cost averaging investor. Dollar-cost averaging is the discipline of buying a fixed dollar amount of a security or fund on a regular schedule regardless of share price or market direction.

  • Investors benefit from a lower average cost per share (total dollars invested over the year divided by number of shares purchased) than the average price paid per share (sum of share prices paid divided by number of purchases).

  • This demonstrates an efficient means of investing.
Mutual Fund Management

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