Mutual funds are a collection of stocks designed to meet a stated investment objective or strategy. For instance, you may be able to choose between a fund that holds small- or mid-sized companies, large blue chip companies, or government bonds. Some funds are designed to provide growth, others to give you income.
He then went on to say, “A fully diversified mutual fund can offer you dozens and sometimes hundreds of individual stocks or bonds. Achieving a similarly diversified portfolio by purchasing individual stocks is more difficult and costly. As with all investments it is important to understand the risks involved.”
In this section he talks about the risks. “Mutual funds provide a stated objective or strategy, giving you some understanding of the level of risk and the potential for return. You can get an understanding of the funds objective and past performance by reading its prospectus. But a funds stated objective may not tell you the whole story.
“Many funds have a great deal of latitude in which stocks they may actually buy. Therefore, even if you own shares of six different funds, each supposedly invested under a different type of overall objective, you may not be as diversified as you think. Each of the six funds may hold shares of the same stock. This would increase your vulnerability to market corrections, even though you may not be aware of the risk.
“A mutual funds performance depends in large part on its portfolio manager. So, what happens if the funds manager changes his or her strategy during the investment period or the fund changes managers? Having an investment advisor who meets regularly with the funds manager to determine his or her strategies and meets with the fund company to determine its policies for hiring and maintaining quality portfolio managers can help you minimize this risk.”
Wellving asset Management have a very experienced Analytical team and a wealth of successful Fund Managers, Wellving have spent years and years honing these skills and have created funds that show steady low risk returns for clients.
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