What is Mutual Fund Management?

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  • Written By: Jim B.
  • Edited By: Melissa Wiley
  • Last Modified Date: 19 January 2020
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Mutual fund management refers to the process by which investment professionals oversee the pooled investment capital of multiple individuals by investing in various securities. The investors within a mutual fund profit when the value of the securities within the fund goes up. In general, the goal of mutual fund management is to provide the investors within the fund with portfolio diversity. This means that the investments within the fund are spread across the entire spectrum of investment possibilities, allowing investors access to a number of investment strategies.

Many investors attempt to take on the stock market all alone, only to find themselves overwhelmed by the sheer magnitude of investment opportunities before them. Choosing between these strategies can be a daunting task, especially for an investor just starting out. For that reason, it can be wise for a novice investor to become involved in a mutual fund. By choosing a fund possessing excellent mutual fund management, an investor can put her capital in the hands of professionals who know how to turn that capital into profits.

To get the benefits of mutual fund management, an investor usually has to make an initial commitment of capital to participate in the fund. The mutual fund manager then takes all of the funds within and spreads it out among many investments. When the overall value of those investments increases, investors reap the benefits in the form of capital gains, which are paid out as the fund hits certain profit levels.


In choosing the mutual fund management that best suits him, an investor should investigate the fund's strategies and goals. These elements are usually included in the investment prospectus provided by the fund management team. The prospectus spells out the types of investments the fund currently has, its future plans and strategies in terms of acceptable risk and targeted return, and many other details important for the investor to know.

It is generally the focus of mutual fund management to provide investors with portfolio diversity. By spreading out the capital within a fund throughout the market, the fund manager can control the amount of risk attached to the capital within the fund. One of the benefits of a mutual fund is that there are generally so many securities included that one or a few underperforming securities can't do too much damage to the fund as a whole. Still, most managers strive to do more than just protect against risk. They also look to provide significant gains to investors in the hopes of improving the value of the fund.



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