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Learning Center > Strategies for Investors > Mutual Funds: Why Mutual Funds?   Printer Friendly VersionPrinter Friendly Version
Mutual Funds: Why Mutual Funds?
Ownership of a mutual fund provides you with a number of advantages, including:
  • Diversification
    Mutual funds typically invest in different securities to create a diverse portfolio. Since each share of a mutual fund represents ownership of the fund's underlying securities, one share provides you with diversification across many securities. Although diversification does not eliminate market risk, it can help to reduce risk by offsetting losses from some securities with gains in other securities. There are thousands of different mutual funds available, ranging from aggressive to defensive. Some concentrate on certain sectors of various industries, while others draw from a wide base of companies and investments.

  • Professional Money Management
    The money that is invested in a mutual fund is managed by a professional portfolio manager. In-depth market research and analysis is performed when choosing the fund's investments. The portfolio manager strives to ensure that the investments remain consistent with the fund's objectives, as stated in its prospectus.

  • Liquidity
    Fund shares can be sold upon request any day that the stock market is open (most funds are priced once a day at 4:00 PM). Some funds even provide checkwriting and the ability to link directly with a checking account.

  • Convenience
    Many funds have relatively low initial investment requirements, automatic purchase plans, and automatic dividend reinvestments.
 
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Investors should consider the investment objectives, risks, charges and expenses of the fund carefully before investing. The prospectus contains this and other important information about the fund. Contact your financial professional for a prospectus and read it carefully before investing.

An investment in our money market funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Although the funds seek to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the funds.

Mutual fund investing involves risks. The investment return and principal value of an investment will fluctuate, and shares, when sold, may be worth more or less than the original cost. Keep in mind that asset allocation and diversification do not assure a profit or protect against loss in declining markets. Investors should consult with their attorney, accountant, and/or tax professional for advice concerning their particular situation.

Mutual funds are distributed by Prudential Investment Management Services LLC, a Prudential Financial company and member SIPC. Prudential Fixed Income Management and Prudential Real Estate Investors are units of Prudential Investment Management, Inc (PIM). Quantitative Management Associates, Jennison Associates, and PIM are registered investment advisors and Prudential Financial companies. Prudential Investments, Prudential Financial, the Rock Prudential logo, Jennison Associates, and Jennison are registered service marks of The Prudential Insurance Company of America, Newark, NJ, and its affiliates.

Mutual Funds: Are not insured by the FDIC or any other federal government agency, may lose value, and are not a deposit of or guaranteed by any bank or any bank affiliate.

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