Why mu­tual funds buy­ing is the best in­vest­ment

The Pak Banker - - International3 -

LONDON: Mu­tual funds may not look sexy, but for most peo­ple, they're the best way to achieve fi­nan­cial goals. That's be­cause mu­tual funds are pro­fes­sion­ally man­aged and of­fer di­ver­si­fi­ca­tion, which you don't get when you buy in­di­vid­ual stocks.

First, let's con­sider why pro­fes­sional man­age­ment mat­ters. When you buy a fund, the fund takes your money and pools it with oth­ers' money into one big pile. The fund man­ager's job is to de­cide which stocks to buy, sell, and hold-while you're busy at work and rais­ing chil­dren. Each man­ager uses a method­ol­ogy or dis­ci­pline to se­lect stocks or bonds. Ev­ery day, fund man­agers and their team of an­a­lysts ex­am­ine the com­pa­nies they own to see if they still fit their cri­te­ria for se­cu­ri­ties se­lec­tion. Fund man­agers spend a lot of time vis­it­ing the com­pa­nies in which they in­vest. Sure, they can read a re­search re­port about a com­pany. By meet­ing com­pany ex­ec­u­tives face-to-face, fund man­agers can get a much bet­ter sense of how the com­pany op­er­ates and what ad­van­tages it has over com­peti­tors. Fund man­agers also visit with a com­pany's com­peti­tors. Plus, man­agers do what's known as "chan­nel checks," which means they visit the com­pany's stores or cus­tomers. For ex­am­ple, if a fund man­ager owns shares of Best Buy (BBY), he'll visit a store to see how many cus­tomers are there and what peo­ple are buy­ing. -Afp

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