A Guide to Mutual Fund Investing
What is a Mutual Fund?
A mutual fund is an investment company that pools money from investors and invests the money in stocks, bonds, short-term money-market instruments, other securities or assets with a predetermined investment objective. The combined holdings the mutual fund owns are known as a portfolio. The fund manager trades the portfolio's contents, sometimes called its underlying securities, realizes capital gains or losses and collects dividend or interest income.
Fund ownership is denoted in shares, and each share represents an investor's proportionate ownership of the fund's holdings and the income those holdings generate. The price of fund shares fluctuates daily in relation to its net asset value, which is calculated based on the total value of the fund divided by the number of shares currently issued and outstanding. Mutual funds may issue or redeem shares to meet investor demand.
A mutual fund can make money for its shareholders in two ways: a security can pay dividends or interest to the fund or a security can rise in value. A fund also can decrease in value.
This guide is not to be construed as a solicitation or an offer to buy or sell securities. The views contained herein are those of BlackRock and are based on information obtained by BlackRock from sources that are believed to be reliable. This material should not be considered tax, investment, legal or other professional advice. The information herein is not necessarily all-inclusive and is not guaranteed as to accuracy. Reliance upon information in this guide is at the sole discretion of the reader. Past performance does not guarantee future results. No assurance can be given that a fund will achieve its investment objective. The investment return and principal value of an investment will fluctuate, so that an investor's shares, when redeemed or sold, may be worth more or less than their original cost.
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Prepared by BlackRock Investments, LLC, member FINRA.
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