A mutual fund is a professionally managed company that collects money from many investors and invests it in securities such as stocks, bonds and short-term debt, equity or bond funds and money market funds.
Mutual funds are a good investment for investors looking to diversify their portfolio. Instead of betting everything on one company or sector, a mutual fund invests in different stocks to try to minimize portfolio risk.
The term is typically used in the US, Canada and India, while similar structures around the world include the SICAV in Europe and the open-ended investment company in the UK.
How can you track the performance of a mutual fund?
In this digital and information age, it has become relatively easy to track investment and portfolio performance. While advisors are irreplaceable partners in your financial journey, it’s best for investors to have some knowledge of their investments. Don’t worry, you don’t have to sit with spread sheets and jaw-dropping charts.
Anyone who has invested through an advisor or intermediary usually receives updates and audit statements that track the performance of the portfolio and scheme. Even in the absence of such declarations, there are several websites and mobile apps that track the performance of the scheme. Some of these sites can be customized to keep track of a particular portfolio. Popular business documents also regularly review and comment on mutual funds.
In addition, you can track your investments using Fund Fact Sheet. It is a one-page background document that provides an overview of a mutual fund scheme with a focus on disclosure of the scheme’s performance and portfolio and is published monthly by each mutual fund. It is like a report card indicating the health of the scheme.