This service is not free. Annual management fees run from .5 percent to 1.5 percent of the fund's assets. By investing in a large number and wide range of securities, mutual funds moderate risks and enhance potential returns. Should one security plunge, another may skyrocket, thus offsetting the two extremes. When money is spread among many investments, there's a better chance of picking some that do well.
Mutual funds allow small investors to enjoy the benefits of diversification.
Ready access to your cash . Open-end mutual funds issue shares whenever you invest and buy them back whenever you cash in. On any day the fund is open, you can arrange to sell your shares at the current net asset value. Net asset value or NAV is the fund's price per share. NAV is calculated by subtracting the fund's liabilities from the total assets, then dividing by the number of shares owned.