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What are Mutual Funds?

A mutual fund is a type of investment in which investors pool their money together to buy a portfolio of stocks, bonds or other securities in order to take advantage of diversification and professional portfolio management at a reasonable cost. Securities in actively managed funds are selected by a team of investment managers and research analysts. Investing in mutual funds enables those investing a modest amount of money to benefit from the same advantages enjoyed by large institutional investors.

Four Advantages of Investing in Mutual Funds

Investors turn to a mutual fund because of four distinct advantages they may offer over investing in individual securities.

1. Professional Management — A mutual fund offers investors access to full-time, professional money managers who have the expertise, experience and resources to actively buy, sell, and monitor investments.

2. Diversification — Buying shares in a mutual fund is an easy way to diversify your investments across many securities, which is just another way of saying that you won't have all your eggs in one basket. If one investment decreases in value, another investment in the portfolio may increase.

3. Affordability — For many people, it would be more costly to purchase directly all of the individual securities held by a single mutual fund. By contrast, the minimum initial investments for most mutual funds are more affordable.

4. Liquidity — Most mutual funds allow you to sell your fund shares on any day the stock markets are open, so you have easy access to your money. Of course the value of your shares, when redeemed, may be worth more or less than their original cost.

Mutual Fund Fees and Expenses

Mutual funds charge fees to cover their expenses, which include professional management, transaction costs for buying and selling securities, fund accounting, legal and other general operating expenses. Investors may incur a sales charge when they buy fund shares. Alternatively, they may be charged a redemption fee if they sell their shares before holding them for a stated period of time.

The expense ratio for each fund states the annual percentage charged by the fund to cover its expenses. Fees and expenses will detract from the fund’s returns.

Types of Mutual Funds

Mutual funds come in many varieties, designed to meet different investor goals. Most of Franklin Templeton’s mutual funds fall into one of four main asset classes:

This website is for information only and does not constitute investment advice or a recommendation and was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. This webpage may not be reproduced, distributed or published without prior written permission from Franklin Templeton.

Any research and analysis contained in this website has been procured by Franklin Templeton for its own purposes and may be acted upon in that connection and, as such, is provided to you incidentally. Although information has been obtained from sources that Franklin Templeton believes to be reliable, no guarantee can be given as to its accuracy and such information may be incomplete or condensed and may be subject to change at any time without notice. Any views expressed are the views of the fund manager as of the date of this website and do not constitute investment advice. The underlying assumptions and these views are subject to change based on market and other conditions and may differ from other portfolio managers or of the firm as a whole.

There is no assurance that any prediction, projection or forecast on the economy, stock market, bond market or the economic trends of the markets will be realized. Franklin Templeton accepts no liability whatsoever for any direct or indirect consequential loss arising from the use of any information, opinion or estimate herein.

The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not necessarily indicative nor a guarantee of future performance.

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Issued by Templeton Asset Management Ltd, Registration Number (UEN) 199205211E.

Investments are subject to risk. The value of investments and the income from them can go down as well as up and you may not get back the full amount that you invested. Past performance is not an indicator nor a guarantee of future performance. Investment returns are denominated in the fund’s currency. Investors investing in funds denominated in non-local currency should be aware of the risk of exchange rate fluctuations that may cause a loss of principal. Potential investors should read the details of the  Offering Documents (particularly the section on “Risk Considerations”) before deciding to subscribe for or purchase a fund. Investors may wish to seek advice from a financial adviser before making a commitment to invest in shares of a fund. In the event an investor chooses not to seek advice from a financial adviser, he/she should consider whether the fund is suitable for him/her.

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Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.