Benefits Of A Mutual Fund Essay

Benefits Of A Mutual Fund Essay

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The investment of money is essential to attaining many goals throughout our lives. Parents are able to carefully save and grow money for their children’s future education, individuals can put away money that will eventually be utilized for the purchase of a new home, yacht or business, and families can save for the golden years of life—retirement. Whatever the end goal may be, there are many investment vehicles that can help get you there. One such vehicle is a mutual fund.
Mutual funds, as defined by the SEC, are companies that pool money from many investors and invest that money in stocks, bonds and other securities or assets. Because of this indirect path to investment, a mutual fund serves as a financial intermediary. Like most anything in the financial world, mutual funds have advantages and disadvantages. According to the SEC, the primary advantages of a mutual fund are the benefit of having a professional manager monitor and invest your money, diversification, affordability and, in some cases, liquidity. The drawbacks of a mutual fund are risk, costs, and taxes (Dolvin, Jordan and Miller 104).
Moving beyond advantages and disadvantages, mutual funds can be separated into two types. The first is an open-end fund, where investors can buy shares in the mutual fund and the fund will invest their money. For this type, there are, technically, an unlimited amount of shares that can be purchased. The second type is the closed-end fund, where the number of shares is fixed and does not change over time. So, were an investor looking to buy shares, they would have to purchase them from an investor looking to sell those shares (Dolvin, Jordan and Miller 104—05). Usually, mutual funds are only under the category of open-...


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...ery in-tune with the overall economy (Morningstar Online). While this information may not provide copious amounts of information about how the fund will do, it does provide a look inside of the managers’ minds. The overall strategy of the fund, whether intentionally or unintentionally, is to follow the economy, and not to react to it or cycles within its many sectors. Essentially, this reaffirms, in a way, the fund’s position to hold equities for the long-term.
In conclusion, The Baron Asset Fund is a respectable mid-cap growth fund. With above average expenses, but also slightly above average long-term returns, the fund has proven itself a sure winner in the mutual fund world. Since this is an open-ended fund, the average investor should not ignore it; however, for the experienced, high-flying investor who is seeking more, this fund may be slightly below par.

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