Mutual Funds
A mutual fund is an investment that combines money from thousands of individual investors into one large pool. This money is then invested into a broad range of stocks, bonds or a combination of both. Run by a professional money manager, the fund is owned by the many individual investors who've purchased shares in the fund. Depending on the types of investments a fund owns, the risk levels can vary. Mutual funds are very popular investments inside savings vehicles such as 401(k)s, IRAs and 529 College Savings Plans.
Allstate offers a variety of mutual funds through fund families such as:
- AIM Funds
- American Family Funds
- Fidelity Advisor Funds
- Lord Abbett
- Oppenheimer Funds
Consider the Benefits
- Professional Management-Mutual fund portfolio mangers are experienced professionals. They make buy and sell decisions based on the fund objectives and monitor fund performance so you don't have to spend your time researching each stock or bond.
- Diversification-Most funds give you exposure to dozens or perhaps hundreds of individual stocks or bonds. If you invest even a small amount in a fund that owns 500 stocks, you automatically invest in 500 companies.
- Flexibility-Usually a phone call is all that's required to redeem your fund shares or move your money from one fund to another in the same fund family.
Weight the Facts
- Returns are not guaranteed-Investing in a mutual fund does not guarantee you will make money, and you may not see your fund shares rise as sharply or quickly as individual stocks.
- Capital gains-The fund manager decides when to sell portfolio holdings and trigger capital gains, which are a payout of the profits from stocks that have gained in value. This could mean additional income to report on your taxes. Also, if you hold a mutual fund for less than one year, you must pay short-term capital gains on any earnings.
- Fees-Some mutual funds have associated fees involved with investing.
