Investments and Insurance > Mutual Funds
Orchestrated Management of Your Money
A Harmonious Arrangement Of Benefits
The Prelude To Understanding Mutual Funds*
A mutual fund provides orchestrated management of your money. Small investors earn the same investment return per dollar as major investors, with a professional making the decisions on your behalf. The money you invest in a mutual fund is combined with other investors' money. Each mutual fund share you own represents participation in the securities within the fund. Dividends and capital gains produced by a fund's portfolio are paid out in proportion to the number of fund shares you own.
Mutual funds are unique because they provide investors with the potential to reap the possible rewards of successful money management, but without their daily involvement. Investors in mutual funds leave the primary investment decisions to professional money managers. After careful scrutiny, managers decide which securities are bought and, during ongoing review, when they are to be sold. As a mutual fund investor, you will receive easily understood statements on a regular basis. The statement divides the income generated by the investment portfolio into dividends and capital gains for easy tax reporting.
Mutual funds are comprised of securities in a variety of industries and companies. Each investor within the fund owns interest in each security. This allows you to buy into the kind of diversification that might not otherwise be accessible. The advantage of diversification is the ability to limit individual risk; however, there is no assurance that this will occur. While some investors purchase a single fund, others choose a "family" of funds - several different funds available from one organization. In a family, you can readily transfer portions of your investment into other funds with different objectives as your needs or financial circumstances change.
Many people choose mutual funds as the vehicle for their investment program because mutual funds are readily available and easy to sell. By law, mutual fund investors have the right to cash in all or part of their shares at any time for the current market value. The value of redeemed shares may be more or less than the original cost.
The popularity of mutual funds is due in part to their suitability as a long-term investment. Many mutual funds have proven to perform consistently better over time than investments made by individuals who may not have the benefit of professional money management, diversification, and liquidity.
Tax Free Income
In addition to their other benefits, some mutual fund categories offer tax-free income. Mutual funds that invest in the bond issues of state and municipal governments pay dividends that are derived from those bonds and are therefore exempt from federal income taxes. Also, state-specific municipal bond funds may be exempt from that state's income taxes. Mutual funds that invest in U.S. Government securities pay dividends derived from the interest of those securities, and thus are exempt from state and local income taxes. Depending on the investor's individual circumstances, income may be subject to the alternative minimum tax.
Mutual Funds Perform For A Wide Audience
Planning for a child's college education? Preparing for retirement, or seeking a steady or increased income?
Whatever your personal financial goals and whatever amount you wish to invest, there may be a mutual fund portfolio that will help meet your needs and level of tolerance risk. Investors seeking an alternative to insured bank-related deposits often find mutual funds a logical choice. Keep in mind, unlike bank products, mutual funds are not FDIC insured, may lose value, and are not bank-guaranteed. Return and principal will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Some of their benefits include: Professional Management, Diversification, Liquidity, and Opportunity for Growth.
There Is A Mutual Fund In Tune With Every Objective:
Interested in growth which may outpace the rate of inflation? Growth Funds invest in established firms with a history of price appreciation. Value Funds invest in companies believed to be undervalued in the market relative to their long-term potential.
Looking for a conservative investment? U.S. Government Funds are historically conservative, have low volatility, and are generally low-risk investments. Keep in mind, past performance is no guarantee of future results.
Growth and Income
Seeking a higher level of current income? Balanced Funds hold stocks, bonds, and cash to obtain both moderate growth and income.
Ready to take some calculated risks? Aggressive Growth Funds strive for maximum return. They use aggressive trading strategies and select more volatile, high growth-potential stocks. They therefore tend to be more prone to risk than more conservative funds.
Tax Free Income1
Eager to save taxes on your earnings? Municipal Bond Funds pay dividends that are exempt from federal income taxes. U.S. Government Securities Funds pay dividends that are exempt from state and local income taxes. State-Specific Municipal Bond Funds pay dividends that may be exempt from state taxes and are exempt from federal income taxes.
Want to participate in opportunities abroad?
Small-Capitalization and/or Mid-Size Capitalization Funds tend to invest in companies with innovative products, services, or technology in growing markets.
1Income may be subject to the alternative minimum tax. Consult your tax advisor.
2International investing involves unique risks relative to factors such as changes in currency valuations and the impact of political, social or economic developments.
Investors should consider the investment objectives, risks, charges and
expenses of the investment company carefully before investing. The prospectus
contains this and other information about the investment company. You can obtain
a prospectus from your financial representative. Read carefully before
Before making any investment decision, speak with an investment professional who can design an asset allocation strategy based on your financial objectives and risk tolerance.
*Securities offered through LPL Financial, member FINRA / SIPC. Insurance products offered through LPL Financial or its
licensed affiliates. New York Community Bank, New York Commercial Bank and
Investment and Insurance Services are not registered broker/dealers and are not affiliated with LPL Financial.
|Not FDIC Insured
||No Bank Guarantee
||Not a Deposit
|May Go Down In Value
||Not Insured by Any Federal Government Agency
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