Basic Knowledge of Mutual Funds

An investment fund invests the money of various investors. The money is invested in all kinds of plans. For example, across multiple companies, sectors and regions in the case of an equity fund. This approach allows you to easily spread the risks of your investment.

Mutual funds come in many shapes and sizes and can invest in stocks, bonds, real estate, or combinations of asset classes. It is a practical way to spread your investments and therefore your risks. Because of this spread and the resulting lower risk, ING believes that most private investors are generally best off with investment funds. But then put together in a balanced way

Equity mutual funds hold the shares of dozens of companies in their portfolios. So you automatically invest your money in several companies at the same time. This also spreads your risks: the loss in one sector can (partly) be absorbed by the profit in another sector.

There are many different mutual funds – even more than there are stocks. The composition of an investment fund’s investments depends on the policy and vision of the fund managers. So you have no influence on this yourself. By investing in investment funds you can still create a wide spread in your portfolio with a relatively small amount. This means you run less risk.

A disadvantage of investing in mutual funds is that the fund managers charge costs for the management of the investments. It is a legal obligation for every fund manager to make ‘Essential Investor Information’ available (usually via the Internet).

This contains the most important information about the fund, including costs. The amount of the costs differs per investment fund. The costs of a fund manager are included in the price of an investment fund.

There are two types of returns on mutual funds:

 

Many investment funds pay dividends. Dividend is a profit distribution to all participants in the investment fund. That profit is usually the net proceeds of any dividends received by the fund itself. But there are also investment funds that never pay out dividends: so-called growth funds.

 

The price of an investment fund can fluctuate. If you sell your participation in an investment fund at a higher price (price) than what you bought it for, you will achieve a return: you will then cash in your price profit.

You can invest in funds with all our investment options. Most listed investment funds are traded once a day, at the rate that applies. You make your choice on a specific investment fund.