Can you tell us what mutual funds is?
In the investment parlance, a mutual fund is a professionally managed investment that pools funds from many investors to purchase different asset classes, especially, equity and fixed income securities. At the core of mutual fund is diversification and professional management of investment by the fund manager.
An Investor’s shares in mutual fund represents his part ownership and income that the fund generates. In the United States, mutual fund accounts for the largest investment in equity. Mutual funds are usually targeted at Pension Fund Administrators (PFAs), Insurance Companies, Cooperatives, Institutional and Individual Investors among others.
What are the opportunities in the mutual fund market?
Mutual funds provide liquidity for Investors. An investor in an open-ended fund can take advantage of rising share prices to realize his profit. Investment in the fund can be used to hedge against inflation. The fund also provides opportunities for steady income and capital appreciation. The fund is used for diversification.
Investment in mutual fund is safe. One can invest in smaller denomination. The processes for acquisition are quick and hassle-free. It is tax deductible and payment are automated. It can be easily planned in consonance with one’s investment objective and can be a one- time investment.
How can one invest in mutual funds?
One can invest in the fund through the fund manager or a securities dealer. This is where consultation with securities dealers commonly called stockbrokers becomes imperative for sound investment advice on processes and procedures for participation in the scheme. They conduct research and do a lot of analysis to be on track with upcoming changes.
What are the risks to investments in mutual fund?
Every Investment has its risk element but the important thing is that the benefits should outweigh the risk. This is called the risk and return trade off. Some investors belief that investment in mutual fund causes dilution of holding. Some perceive high cost of management, especially, when one invests in many mutual funds and the so-called exist load.
Looking at the investment environment, which of the Funds are more profitable for investors to invest in?
No matter the state of the economy, every investment has both upside and downside. The key issues for every investor are the investment objectives, risk tolerance, time horizon and source of fund. An investor requires professional advice from securities dealers in this regard.
What is the minimum amount for investment in Mutual Fund?
Minimum amount for investment in mutual fund is not cast in iron. But the price is usually N100 or its equivalent in foreign currency and at par. For instance, Futureview Asset Management is currently offering two mutual funds.
They are Futureview Dollar Fund and Futureview Equity Fund. Futureview Dollar Fund which is targeted at both Nigerians in diaspora, foreign investors and those in the country is 15,000 units at $100 per unit while Futureview Equity Fund comprises 5,000,000 units of N100 each, both at par.