A mutual fund is a type of investment vehicle where the money collected from various investors is pooled together to invest in different assets including bonds, stocks, and/or money market investments

Because mutual funds invest in a collection of companies, they offer instant diversification (thus lower risk) to investors. Mutual fund investors share in the fund’s profits and losses. There are 2 fundamental types of mutual funds; Active and Passive.

Actively managed mutual funds usually aim to beat the market (though outperforming the market regularly over the long term is hard to do), while passively managed index funds, for example, work to simply match the market’s performance. For example, an S&P 500 mutual fund would try and replicate the performance of the S&P 500 stock market index buy investing in a tiny percentage of each of the companies in the S&P 500.

With mutual funds, investors have a lot of choices to try and grow their money between stock funds (“equity funds”), bond funds (“fixed-income funds”) or funds that offer both (“balanced funds”). Within these categories, there are even more distinct funds to choose from. For example, “sector funds” allow you to invest in a specific industry, like clean energy, while “growth funds” allow you to focus on companies with capital appreciation.

Since actively managed mutual funds require daily human management, investing in one could come with higher management costs and fees than choosing a passively managed index fund. Also, note that many mutual funds will require a minimum investment, ranging from $500 to $3,000. Though some have no minimums whatsoever.

Mutual Funds are perhaps the most highly regulated investment product available in Canada. The terms and conditions known as the prospectus, define each fund and must be subject to regulatory submission and approval. A mutual fund prospectus is a document detailing the investment objectives and strategies of a particular fund or group of funds, as well as the finer points of the fund’s past performance, managers and financial information. You can obtain these documents directly from fund companies through mail, email or phone.

The prospectus informs the investors —it is a legal commitment and promise made by the issuer towards the investors. The prospectus cannot be arbitrarily changed. If material changes are contemplated by the Investment Company that owns or sponsors a Mutual Fund, then a new prospectus must be submitted for approval by the regulatory authorities, and Unit Holders (you) must be informed of these changes and your approval sought to enact these changes. In simple terms a fund offered as a Canadian Equity Fund cannot suddenly have a majority of its investments comprised of European based companies.

The vast majority of mutual fund holdings are found in balanced funds. These funds are comprised of fluctuating exposure to Stock, Bonds, Cash and may have access to or use of a variety of risk mitigating tools to try to minimize both loss and volatility in the investment marketplace.

We no longer offer Mutual Funds through our investment facilities. We have transitioned to a Managed ETF model. We have found the reduced costs, flexibility, and broad diversification available through ETF’s have enhanced our client’s financial well-being.