A single mutual fund may hold securities from hundreds of different issuers, something few investors could do on their own. This broad diversification sharply reduces the risk of losing money because of problems with any single stock or bond. This can be a valuable service because few investors have the time or expertise to properly manage an investment portfolio. Shares in a mutual fund may be sold on any business day. A fund is required to redeem shares for the market value of the securities within the fund.
Mutual funds offer a variety of services that make investing easier.
Fund shares may be purchased or sold by mail or by telephone, and your money can easily be moved from one fund to another as your investment needs change. The market value of a mutual fund may fluctuate, even if the fund invests in U.S. government securities. The downside of diversification. Although there are thousands of funds to choose from, most fit into one of four basic categories, depending on the assets held in the fund. Money market funds invest in cash investments or money market instruments that are short-term IOUs issued by governments, corporations, banks, or other financial institutions.