Understanding & Investing in Mutual Funds

 

What is a mutual fund?

Mutual funds offer long-term investors a simple way to build a portfolio to help meet a range of investing goals. Merrill Edge offers funds for every type of investor, from actively managed funds that offer the expertise of professional portfolio managers to lower-cost alternatives with no load or transaction fees, although mutual funds have other costs and fees.
Mutual funds:
  • Are professionally managed
  • Can provide portfolio diversification
  • Generally have low minimum purchase requirements
  • Typically cost less than investing directly in the securities in the fund
  • Provide daily liquidity—you can sell shares back to the fund for cash on a daily basis
  • Are sold only by prospectus. Please read it carefully before you invest.
 
Play video: Understanding mutual funds
 
Understanding
mutual funds
Learn how to incorporate mutual funds into your investment plan.
Read: How mutual funds can help you pursue your goals
 
How mutual funds can help you pursue your goals
This article explains mutual fund basics—including the difference between active and passive funds—plus more mutual fund investing tips.
 
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Merrill Edge Investing
Classroom
Learn at your own pace with online courses that include:
  • Mutual funds and NAVs
  • Understanding total return
  • Mutual funds and taxes
 
Mutual funds are not FDIC insured; are not deposits or obligations of, or guaranteed by, any financial institution; and are subject to investment risks, including possible loss of the principal amount invested. Investment return and principal value will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost.
 

How mutual funds fit into your portfolio

Mutual funds—diversified pools of investments professionally managed to their stated objective—offer a convenient and economical way to build portfolios for a broad range of needs.1
  • Single funds may be right for new mutual fund investors
  • Target-date funds help you invest toward time-sensitive goals
  • Active funds offer flexibility in volatile markets
  • Passive funds generally charge fewer fees
Play video: Asset allocation and your portfolio
 
Asset allocation and
your portfolio1 (1:48)
When deciding how to allocate your money among different investments, be sure to consider your goals, investment experience, time frame, liquidity needs and your comfort level with risk.
 
Read: Mutual fund investment styles
 
Mutual fund
investment styles
Learn more about the variety of investment styles used by mutual fund managers.
 
How to Build a Portfolio
 
How to build a portfolio
  • Consider your time horizon and comfort level with investment risk when choosing the proper asset allocation
  • Select diversified investments that align to your goals
  • Monitor your investments to help keep your portfolio on track
 
Go to the Merrill Edge Classroom powered by Morningstar
 
Merrill Edge Investing
Classroom
You can take online classes that include:
  • Building your mutual fund portfolio
  • Choosing an index fund
  • Sector-fund investing
 

How to choose a mutual fund

Whether you're just starting out or seeking fresh ideas, Merrill Edge provides timely tools and relevant resources along each step of your investing journey.
Criteria to consider
Some of the factors to consider when selecting mutual funds include:
  • Past performance measures, such as 3- and 5-year returns, though past performance is no guarantee of future results
  • Risk measures, such as information ratio and tracking error
  • Manager tenure and track records
  • Costs, especially expense ratio, as described in the prospectus
 
Read: How to choose a mutual fund
 
How to choose a mutual fund
This article explains how mutual funds work and some terms you should know as a mutual fund investor.
 
View a list of mutual fund definitions
 
Mutual fund definitions
View mutual fund definitions from our glossary, including:
  • Index fund
  • Net asset value (NAV)
  • Redemption charge
Go to the Merrill Edge Classroom powered by Morningstar
 
Merrill Edge Investing
Classroom
Advanced online courses include:
  • Style-box-specific versus flexible funds
  • Where and why asset size matters
  • Calculating your cost basis
 
 
 

Action items for mutual fund investing

Identify your objectives, risk tolerance and time horizon
Decide which mutual funds match your investor profile
Look closer at specific funds within various categories
 
View mutual fund research and insights from BofA Merrill Lynch Global Research, BlackRock, CFRA (powered by data from S&P Global) and Morningstar
 
 
Keep an eye on specific funds in your watchlistPlease login to view content
 
Carefully evaluate each mutual fund
 
 
 
Compare costs with the Mutual Fund Calculator
 
 
Get price, ratings and earnings alertsPlease login to view content
 
 
Access your accounts and market information anytime with our mobile app
 
 

Related resources

Let us help you narrow your choices
Merrill Edge Select™ Funds are selected through a proprietary process that takes risk, cost and performance into account.
 
Choose a target fund aligned to your goals
Help take the guesswork out of managing your portfolio by selecting a target allocation fund or target date fund aligned to your investment goals.2
 
Mutual Fund Screener
You can filter a vast universe of mutual funds based on specific criteria you choose and adjust.
 
More considerations for mutual fund investors
Mutual funds are sold only by prospectus, which explains:
  • Charges, fees and expenses
  • How funds are selected and traded
  • When you can trade your shares
 
More you can do
 
 
Go to the Investor Education page
 
Investor education overview
You can learn about all of the investments we offer based on your level of experience, topic, or the resource format in the Investor Education learning center.
 
 
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Videos
 
 
Calculators
 
Courses
 
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1 Diversification and asset allocation do not ensure a profit or protect against loss in declining markets.

2 The target date (or retirement date, as applicable) for these funds is the approximate date when an investor plans to start withdrawing the assets from their retirement account. The principal value of these funds is not guaranteed at any time, including at the target date. These funds are designed to become more conservative over time as the target date approaches.

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