The Mutual Fund Advantage

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Investors who are seeking growth or income have many investment options from which to choose. The challenge is to determine which ones can best help you pursue your specific goals while diversifying your portfolio and managing your exposure to risk. Investing in mutual funds may be an excellent way to do this.

What Is A Mutual Fund?

Mutual funds are diversified investments that pool investors’ money to purchase stocks, bonds and other securities. When you purchase shares of an open-ended mutual fund1, you generally pay the Net Asset Value (NAV) plus any applicable sales loads and transaction fees. All mutual funds carry built-in operating expenses that affect the fund’s return. Examples include investment management fees, distribution and marketing fees (called ‘12b-1 fees’ or annual distribution fees) and mutual fund transaction fees. Details on the operating expenses are included in each fund’s prospectus.

The Mutual Fund Advantage

Mutual funds have long been valued for the many potential advantages they offer, including:

 

Diversification

It is important to diversify among issuers and/or market sectors within each asset class in order to reduce the risk of loss in any single investment. Mutual funds offer an efficient way to achieve diversification by enabling investors to purchase shares in a professionally managed portfolio of securities. Diversification does not assure a profit or protect against a loss in a declining market.

A joint venture is a general partnership established for a specific purpose. In general, the same considerations set forth above for general partnerships are applicable to joint ventures.

Professional Management

Few investors have the time or skill it takes to effectively manage a large portfolio of securities. Each mutual fund has at least one professional fund manager who monitors the fund’s investments on a daily basis and decides which securities to buy and sell, and when.

Liquidity

If you need cash, you can redeem all or part of your shares any business day and receive the current value of your investment at the close of the market. As with all securities, the value of the fund will fluctuate with market conditions therefore, an investor’s shares, when redeemed, may be worth more or less than their original cost.

Flexibility

When you invest in a “family” of mutual funds, you can typically transfer all or a portion of your investment dollars from one fund to another as your objectives change, or the economic climate dictates without incurring fund transfer charges. It is important to note, however, that transfers may be subject to certain restrictions. And redemption of fund shares may cause a taxable event for the investor.[2]

Convenience

The funds handle all the paperwork associated with share ownership. You will receive detailed account statements, including records of the tax status of all interest, dividends and capital gains received.

Today there are thousands of mutual funds from which to choose so it pays to seek the advice of an investment professional to help you make the appropriate choice.

 

For more information about how you can use mutual funds to diversify your portfolio, contact your financial advisor today. You can also go to http://financialservicesinc.ubs.com and click on investment solutions, then Mutual Funds to learn more about mutual funds and their pricing structures, as well as some of the risks associated with mutual funds. Mutual funds are offered by prospectus. The prospectus contains more complete information regarding the investment objectives, risks, charges and expenses associated with an investment in a fund. Please ask your Financial advisor for a free prospectus. Be sure to read and consider the information found in the prospectus carefully before investing. 1 an open-ended mutual fund is an investment company that continuously offers new shares in an actively managed portfolio of securities. [2] Neither UBS Financial Services Inc. nor its employees provide tax or legal advice. you must consult with your legal and/or tax advisors regarding your personal circumstances. Please visit our website at http://financialservicesinc.ubs.com/wealth/e-maildisclaimer. html for important disclosures and information about our e-mail policies. For your protection, please do not transmit orders or instructions by e-mail or include account numbers, social security numbers, credit card numbers, passwords, or other personal information.

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