Benefits of Investing in Mutual Funds
What is a Mutual Fund?
A mutual fund is a pool of money accumulated from thousands of investors. Investors receive a proportionate share in the pool
through shares or units. A mutual fund manager will then take the pool of money and decide what securities to buy and sell within
the mutual fund on behalf the individual investors. These decisions are made with the assistance of high quality investment
research and are made by experienced investment professionals.
What are the benefits of investing in a mutual fund?
Mutual funds are an affordable and convenient way for investors to gain access to investments that would otherwise only be available
to large institutions or wealthy individuals. Mutual fund investing offers:
Professional Money Management - Mutual Funds are managed by professional money managers who have access to detail company
research, economic data, and an understanding about how world events will affect your investments. This feature has particular
value for investing in foreign markets where information is not always readily available to a retail investor and local laws and
accounting practices are different than those in Canada, and therefore difficult to interpret.
Diversification - "Don't put all of your eggs in one basket". By investing in only one security you take on a great deal
of risk of that investment under performing. By spreading your portfolio over several different investments this risk is reduced,
thus reducing the overall risk of your portfolio. Since many investors cannot afford to split their portfolios into several
different securities without paying a fortune in commissions, mutual funds are the ideal solution. By pooling the resources of
several retail investors mutual funds can get better pricing and much lower commissions than a retail investor can get.
This provides the benefits of diversification as a much lower cost.
Transferability - Since most mutual fund families offer more than one type of mutual fund, a mutual fund investor has the
ability to move their investment from one sector to another, from one country to another easily and (usually) without cost.
An investor who purchases their own stocks would have to sell their old stocks and buy their new stocks, paying commissions on both
trades.
Liquidity - Mutual fund units are bought from, and sold back to the mutual fund company at the next available closing Net
Asset Value Per Share. Any investor who wants to buy or sell a mutual fund can do so without having to worry about whether a liquid
market is available. For retail equity investors, their ability to execute a trade depends on the availability of someone else who
is willing to take the other side of the market.
Fractional units - Mutual funds offer the unique feature to investors of allowing for fixed dollar investments. For
purchases of equities you cannot invest a fixed dollar amount, you can only purchase a fixed number of whole shares. This makes
it uncertain as to the total cost of the trade and means that you may not be able to fully invest idle cash. If you want to
purchase a set dollar amount of a mutual fund, you will be allowed to purchase fractional units to ensure that you remain fully
invested.
Compounding - Another unique feature of mutual funds is that any distributions that are paid by the fund can be
automatically re-invested into additional units of the same fund at no cost. This will help to ensure that you are staying fully
invested, thus maximizing your returns through compounding.
Time - The most important benefit of investing in mutual funds is that it saves you time! By having the mutual fund manager
manage your investments you no longer have to spend your time analyzing and worrying about individual stocks.
Why invest in mutual funds at TD Waterhouse?
By investing in mutual funds at TD Waterhouse you will have the flexibility of holding all of you investments in one account:
stocks, bonds, options, and mutual funds. If you need professional assistance in managing your mutual fund holdings we can provide
this to you using the TD Managed Assets Program (MAP). If you still want to manage your own investments but require some
advice and guidance in narrowing down your mutual fund choices our FundSmart Mutual Fund Specialists are available to assist you
free of charge 8 AM to 8 PM Monday to Friday by calling 1-800-461-FUND (3863).
Let us show you why TD Waterhouse is the only choice for your mutual fund investing!
Important information about mutual funds is contained in their simplified
prospectus, which we encourage you to read carefully before investing. Money
market fund yields will fluctuate and there is no assurance that these funds
can maintain a fixed net asset value. Yields, investment returns and unit values
will fluctuate for all other funds. Past performance is no guarantee of future
performance. Switches are subject to purchase provisions. Mutual Fund investment
units are not insured by the Canada Deposit Insurance Corporation or the Régie
d'Assurance dépts du Québec and are not guaranteed by the Bank. Please note
that some funds listed are not available in all provinces
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