MUTUAL FUNDS

A mutual fund is a large pool of money from many different individuals which is used to buy a wide range of investments.

When you purchase mutual funds, you purchase what are known as units in the fund. Each unit of the fund represents a portion of the funds assets. The value of each unit is determined by dividing the total value of the investments by the total number of units issued by the fund. This value is know as the NAV ( Net Asset Value), which is the price at which an individual buys or sells units of the fund. Most funds calculate their NAV daily.

Mutual funds are generally considered long term investments although some mutual funds such as money market funds are ideal for short term goals.

Mutual funds are not covered by the Canada Deposit Insurance Corporation (CDIC) or any other government deposit insurer. Unit values change frequently and even with money market funds, there can be no assurance that the fund will be able to maintain its NAV at a constant level, or that the full amount of your investment will be returned to you. Past performance may not be repeated. Various types of risk such as, market risk, foreign exchange risk, interest rate risk, inflation risk and volatility exist when investing into mutual funds. This risk however is minimized over the long term. An individual should consult with their financial planner to see whether mutual funds are appropriate for their personal needs.

Mutual funds offer many advantages to individuals over purchasing investments directly.

Mutual funds provide diversification of investments as most hold at least 30 individual investments with some holding well into the hundreds.

Professional management is another benefit as most individuals either do not have the time or lack the knowledge and experience to manage their own assets.

Mutual funds provide investors with access to other markets around the world. Fund managers are situated around the globe, thereby providing you with their expertise regarding foreign markets.

Ease of investing is offered to individuals as mutual funds make investing easy. You can get started for as little as $50 per month.