How Does a Mutual Fund Work?
With busy lives taking us in so many different directions, having professionally managed investments can be a real plus (and a relief) for working toward your personal financial goals.
When you invest in a mutual fund, you're essentially pooling your money with other investors to access a broader range of stocks or bonds than most people could own by themselves.
The investment company uses the money in the fund to buy and sell securities, such as stocks or bonds, to reach their goals listed in the company charter. The fund objectives and other important information are found in a document called a Simplified Prospectus.
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Mutual Fund Objectives
One goal a mutual fund may try to achieve is long-term growth of funds. This may be done by purchasing the stock of large companies that consistently made a profit, or buying the inexpensive stock of smaller companies, hoping the value increases. Some funds may be invested primarily in foreign companies, while others invest in specific market segments — like resources, technology or health care.
Some funds are developed to generate income for the investors. Dividends from bonds or preferred stocks held by these funds are accumulated and distributed to investors on a regular basis.
How a Fund is Managed
Many funds are actively managed, with an experienced portfolio manager actively determining the portfolio (or holdings) of the fund. The securities held in a fund may change, based on how well it performs and meets the goals of the fund.
Have Questions about Investing?
Contact a State Farm®representativeto talk about your current needs and opportunities, and to get help developing a plan to fit your personal goals.
Mutual Funds are not insurance products and are distributed through representatives of State Farm Investor Services (Canada) Co. State Farm Investor Services (Canada) Co. is a separate legal entity from State Farm Mutual Automobile Insurance Company, or any of its insurance affiliates.
Please read the applicable Fund Facts before investing. Commissions, trailing commissions, management fees, and expenses may be associated with mutual fund investments.
Mutual Funds are not guaranteed, their values change frequently and past performance may not be repeated. Mutual fund securities are not covered by the Canada Deposit Insurance Corporation or by any other government deposit insurer.
Neither State Farm nor its agents provide tax or legal advice. Please consult a tax or legal advisor for advice regarding your personal circumstances.
State Farm Investor Services (Canada) Co. Aurora, Ontario.