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What are mutual funds?

A mutual fund is a professionally managed portfolio of stocks, bonds and/or other income vehicles devoted to a specific investment strategy or asset class. When investors buy shares in the fund, the mutual fund company pools that money to make investments on their behalf. A share represents a portion of the fund's holdings.

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What are the potential benefits of investing in mutual funds?

Diversification
Diversification
Because mutual funds can invest in many different stocks or bonds, they give investors an easy way to diversify their portfolio.
Low cost
Low cost
Mutual funds offer an affordable way to invest in a wide array of stocks without paying transaction fees for each stock held.
Management
Management
Experienced investment teams set the fund's strategies, research investments, make trades and monitor the fund's performance.

What factors should I consider before investing in mutual funds?

While reviewing your mutual fund options, be sure to evaluate your:

  1. Goals
    What do you want from your mutual fund investment? Are you saving for your retirement, your children's college or investing money for future generations? The answers to these questions can help you narrow down which funds would work best.
  2. Time horizon
    Mutual funds are typically better suited for long term investors. If you think you'll need your money in the near future, say within three to five years, then a mutual fund may not be the best option. This is because the return in that amount of time – once removing the cost of fees – may not be enough to make the investment worth it.
  3. Risk tolerance
    Determine how comfortable you are with risk and invest accordingly. Understanding your risk tolerance can help you select funds with strategies and asset allocations that fit this profile.

What are some risks associated with mutual funds?

There are a couple of potential risks associated with mutual funds:

  1. Potential for loss of principal
    Portfolio managers can't guarantee the performance of the fund, creating potential for loss of principal on the investment.
  2. The diluting effect of diversification
    At times, a fund's diversification can have a diluting effect on positive returns. For example, if one stock in the fund doubles its share price, that's not necessarily reflected in the fund's overall return.

What are some myths surrounding mutual fund investment?

There are two common misconceptions about mutual funds:

  1. Investors own the fund’s underlying investments
    The biggest misunderstanding regarding mutual fund investment is that investors own shares of the fund's holdings. That's not the case; investors own shares of the fund itself, rather than the fund's underlying investments.
  2. Mutual funds are only comprised of stocks
    Another common myth is that mutual funds are only comprised of stocks. In fact, mutual funds can invest in a variety of asset classes, including, but not limited to, fixed income, cash and non-traditional income vehicles, like alternatives.

Mutual funds to invest in

As a leader in the world of mutual funds, BlackRock offers many varieties to help meet your investment goals. Our selection includes:

  • Fixed income funds invest in bonds or other fixed income instruments and are understood to typically carry less risk than stocks, or equities
  • Equity funds invest in the stock market to help your investment grow over time.
  • Multi-asset funds are designed to deliver returns by investing across asset classes and dynamically adjusting investments over time

There are mutual funds targeted toward growth, that seek to manage against risk and navigate different market conditions, and asset allocation funds to help support a balanced portfolio. Below are some examples of funds to consider and are not meant as recommendations. The funds shown below do not represent the full universe of investments that could compose an asset allocation. Other investments not mentioned here may have characteristics similar or superior to those that are included. Consult with your financial professional before making any investment decisions.

Why choose BlackRock?

BlackRock offers a comprehensive selection of high-strong-performing, low-cost mutual funds, designed to cover multiple asset classes, geographic areas and investment goals. Our clients can invest in funds run by some of the industry's leading portfolio managers, benefiting from their deep experience and expertise.

BlackRock offers one of the largest selections of funds. In addition, BlackRock's investment teams use our Aladdin® investment platform to inform their decision making and better manage risk.

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What are mutual funds made of?

Mutual funds invest in a variety of asset classes, including stocks and bonds. Learn more about how these asset classes can play a role in an investment portfolio.

Learn about stocks

Learn about fixed income