If you're new to investing, a mutual fund is a great place to start. It's a simple and accessible way to gain exposure to a wide range of financial assets, all managed by professionals. Here's a clear explanation of how it works and why it might suit your investment needs.
What is a mutual fund?
A mutual fund is a type of investment product that pools money from multiple investors to invest in a diversified portfolio of stocks, bonds, or other securities. These funds are managed by professional fund managers who handle all the decision-making—from selecting assets to rebalancing the portfolio.
When you invest in a mutual fund, you buy 'units' of the fund, and the value of your investment fluctuates based on the performance of the fund’s underlying assets.
Key benefits of mutual funds
| Feature | Explanation |
|---|
| Diversification | Investing in a mutual fund spreads your money across multiple securities, reducing the impact of poor performance by any one stock or bond. |
| Professional management | An expert portfolio manager makes investment decisions on your behalf based on research and market trends. |
| Liquidity | You can redeem (sell) your mutual fund units at any time, typically at the end-of-day Net Asset Value (NAV). |
Mutual funds are ideal for both beginners and experienced investors looking for long-term wealth creation through professional fund management.
Last updated: 10 Jun 2025
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