What is a Mutual Fund?
A mutual fund pools money from many investors and invests the money in stocks, bonds, short-term money-market instruments, or other securities.
What types of mutual funds are there?
Mutual funds come in many varieties. For example, there are index funds, stock funds, bond funds, money market funds, and more. Each of these may have a different investment objective and strategy and a different investment portfolio. Different mutual funds may also be subject to different risks, volatility, fees and expenses.
Here are a few definitions:
| Fund Type | Invests in | Objective |
| Index Fund | Stocks and/or bonds represented on the index(es) the fund is tracking | Track the performance of a particular market index or indexes such as S&P/TSX 60 or S&P 500 |
| Income Fund | Fixed income investments such as bonds and income trusts | Provide a fixed or steady income |
| Equity Fund | Equities (stocks) | Provide long-term growth. |
| Balanced Fund | Both fixed income investments (at least 40%) and equities (no more than 60%) | Provide a balance of income and growth |
Are mutual funds risky?
Most investments carry risk but remember that risk can be understood and managed. The amount of risk taken in a mutual fund will depend on many variables, including the types of securities or stocks held in the mutual fund.
Are mutual funds CDIC insured?
Although mutual funds are not guaranteed by CDIC insurance, ING Direct Funds Limited is covered by the MFDA Investor Protection Corporation (IPC). Learn more.
There are many regulatory bodies that help govern and manage the mutual fund industry. Also, as a mutual fund unit holder, you are an owner of the fund. If the Fund Company wants to make a fundamental change to your mutual fund, they have to ask all the unit holders to vote on that change.
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