Nature and Benefits of Mutual Funds

Questions and Answers

What is the primary goal of mutual funds for investors?

To reduce risk and provide returns (correct)

To maximize taxes on profits

To eliminate the need for financial advisors

To encourage high-risk investments

Why might mutual funds be an attractive option for retail and institutional investors?

They operate without any fees or expenses

They provide guaranteed returns regardless of market conditions

They allow for diversification with smaller capital outlay (correct)

They require extensive knowledge of the stock market

How do mutual funds mobilize investor savings?

By channeling investments towards the stock or securities market (correct)

By offering loans to investors

By investing directly in foreign currencies

By redirecting funds to commercial banks

What is a common misconception about investing in the capital market compared to mutual funds?

Mutual funds require less investment to achieve diversification Signup and view all the answers

What type of investor is most likely to benefit from mutual funds?

Investors who want an easy-to-understand investment option Signup and view all the answers

How can investors select mutual funds that fit their needs?

By considering risk profile, time horizon, and investment objective Signup and view all the answers

What is one advantage of using a Systematic Investment Plan (SIP) in mutual funds?

It enables investments with as small an amount monthly Signup and view all the answers

Which of the following is NOT a benefit of investing in mutual funds?

Offers high return without any risk Signup and view all the answers

Study Notes

Nature of Mutual Funds

Mutual funds are crucial for economic growth and development.
Serve as a means to channel investor savings into the stock or securities market, reflecting the economy's health.
Investment in mutual funds often increases due to a lack of knowledge about direct stock market investing.
Attractive to both retail and institutional investors, aiming to reduce risk while providing returns.

Recommended Mutual Funds in the Philippines

Soldivo Strategic Growth Fund
ATRAM Alpha Opportunity Fund
Philequity Fund
Sun Life Prosperity World Equity Index Feeder Fund
ALFM Global Multi-Asset Income Fund, Inc.
COL Equity Index Fund

Benefits of Investing in Mutual Funds

Easy to understand and convenient investment choice with numerous advantages.
Ideal for investors hesitant to directly engage with the capital market.
Wide range of mutual fund options suited to individual investment goals, income levels, risk appetites, and expected returns.
Allows for a diversified portfolio with lower capital outlay due to pooled investments compared to individual stock purchases.
Systematic Investment Plans (SIPs) enable disciplined investing with small monthly contributions.
Variety of mutual fund schemes are available, catering to different risk-return profiles, investment timelines, and objectives.

Description

Explore the nature of mutual funds and their significance in promoting economic growth. This quiz also highlights recommended mutual funds in the Philippines and discusses their various benefits, making them an attractive investment option for both retail and institutional investors.