Why Open-ended fund
What is an Open-end fund?
An Open-ended fund is a professionally managed fund that lets you pool your money with other investors to purchase a collection of securities-such as stocks and bonds-across multiple corporations or other issuers (government, investment trusts). Although investors don’t directly own the securities, they mutually share in the fund’s profit or losses.
The benefits of Open-end fund
Return on investment is the profit or loss expressed as a percentage of the initial investment. This is a widely used ratio to evaluate and rank the attractiveness of different investment alternatives. When this ratio is positive, the investor earns more than what s/he paid for the investment. Conversely, when this ratio is negative, the investor earns less than what s/he paid.
- Investing in just a handful of stocks can leave you exposed to what is called “overconcentration.” When one or two stocks that represent a sizable portion of your savings decline, it can have an undue influence on your investment performance. Mutual funds help provide instant diversification since they invest across dozens or sometimes hundreds of individual stocks, bonds, or other securities.
- Further, history shows that large groups of stocks tend to ride out market volatility better than individual stocks. For example, when the market is volatile, one poor performing stock may be smoothed out by other stocks that are performing well in the same index, which may help reduce the risk to your overall portfolio than if you were invested in only one stock.
- Mutual funds are easy to buy and sell as they provide one-stop shopping. If you wanted to invest in all the stocks in a mutual fund that owns 100 companies, for example, you could do it the hard and costly way by buying an equal proportion of all 100 companies, or you could buy them all in one place through a mutual fund.
- Having a professional manager reviewing and researching the mutual fund’s portfolio on an ongoing basis takes a lot of the work—and emotions—out of investing. Fund managers have disciplined processes for buying and selling, which can help investors navigate challenging periods in the market, when they might have otherwise let fear or uncertainty negatively affect their investing decisions.
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