What is a mutual fund*?

A mutual fund is simply a professionally managed investment that pools your money with the money of other like-minded investors who have similar investment goals. Your investment is used to buy securities that, in the fund manager's judgment, will help achieve specified investment objectives of the fund. The fund manager is able to purchase a wider variety of securities than most investors could afford to buy individually.

Why do people use mutual funds?

Many people purchase mutual funds because they are a convenient and cost-effective method of obtaining diversification and professional management. Because mutual funds hold anywhere from a few securities to several hundred, risk is spread out over a number of investments. Additionally, mutual funds generally buy and sell securities in volume, which allows investors to benefit from lower trading, management and research costs.

What are the benefits of investing in mutual funds?

• Professional Management. When you invest in a mutual fund, you benefit from having experienced professional fund managers looking after your fund. These managers, who have access to extensive market research information and who have a solid understanding of the intricacies of the financial markets, are able to make informed investment decisions.
• Diversification. When you invest in mutual funds, you are able to invest in a wide array of companies and industries. You can also invest in different types of assets, such as equities, corporate and government bonds and cash reserves. This is a level of diversification that for you, as an individual investor, would take much effort and money to achieve on your own. Such diversification reduces the risk of loss from problems with any one company or institution.
• Compounding. When you invest in a mutual fund, income that you may earn can be reinvested on your behalf. This means you are earning money on both your initial principal and on the money your investment is making. With the added advantage of investing in mutual funds within your RRSP, the growth potential can be quite substantial over time.
• Dollar Cost Averaging. When you invest in a mutual fund, you can contribute a fixed amount on a regular basis (such as monthly) and take advantage of any fluctuations in the market. So if the unit value of your fund goes down, your monthly investment will purchase more units. This means that when the unit value of your fund increases you will have more units and your investment will be worth more.
• Liquidity. When you invest in a mutual fund, you have the benefit of being able to redeem part or all of your investment at any time. Although, if it is registered you will have to pay a withholding tax. You can usually sell your mutual fund shares quickly and easily on any business day, at that particular day's price. This allows you quick access to your money if you need it in case of an emergency.

Are mutual funds guaranteed?

No. As many funds state, past performance is no guarantee of future results. However, fund managers and the funds themselves operate under strict securities regulations. For example, mutual funds are owned by the unitholders and are separate legal entities from the companies that operate them. Securities legislation also requires that mutual fund assets be held in trust by a custodian on behalf of unit holders. In addition, mutual fund investments are not covered by the Credit Union Deposit Insurance Corporation deposit guarantee.

What is a "socially responsible" fund?

In addition to the usual investment goals, these funds restrict their investments to whatever they define as socially responsible. Such criteria can include: avoiding military, alcohol, tobacco, and gambling industries; preferring companies that treat their employees and the environment well. Different funds have different social and investment criteria.

What are exchange-traded funds?

It's an investment fund holding various assets such as stocks, commodities and bonds that is traded on a stock exchange. These funds usually track an index, such as the S&P 500, TSX or Dow Jones, and as a result, track with the ups and downs of stock and bond markets. Like stocks, ETFs are bought and sold throughout the day at the current market price.

What is a "fund of funds"?

This is a mutual fund that invests in other mutual funds to help investors achieve greater diversification. Just as a traditional mutual fund invests in different securities, a fund of funds (or fund wrap) holds shares in many different mutual funds and is usually marketed as a "total solution" product. We offer several fund of fund solutions.

Who is the typical fund owner?

According to several surveys by the Investment Company Institute (ICI) conducted over the last several years:

• 63% of investors own at least two mutual funds.
• 43% of investors own four or more funds.
• The average mutual fund investor holds $18,000 in mutual funds.
• The average median age is 44 with a median household income of $60,000.

Other interesting facts from the ICI surveys include:

• 73% of mutual fund investors own stock funds.
• 49% of mutual fund investors own bond funds.
• 52% of mutual fund investors own money market funds.
• 60% of mutual fund investors purchased their funds through a broker, insurance agent, financial planner or bank rep.

How much do I need to start?

The minimum initial investment is generally $1,000 for a non-registered account and $100 for an RRSP account. The minimum subsequent investment is $100 for both types of accounts.

What is CRM2?

Client Relationship Model - Phase 2 (CRM2) is the name of a set of rules developed by investment industry regulators to make it easier for Canadians to understand how their investments are performing and how much their investments cost.

How are fees disclosed?

As of January 2017, a Charges and Compensation Report provides in total dollar amounts, the fees you paid on your investments and the compensation BlueShore Financial and our investment partner Credential received.

Mutual funds are offered through Credential Asset Management Inc. Mutual funds and other securities are offered through Credential Securities, a division of Credential Qtrade Securities Inc. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Unless otherwise stated, mutual fund securities and cash balances are not insured nor guaranteed, their values change frequently and past performance may not be repeated. Credential Securities is a registered mark owned by Aviso Wealth Inc. Credential Asset Management Inc., Credential Qtrade Securities Inc. and Northwest & Ethical Investments L.P. are wholly owned subsidiaries of Aviso Wealth Inc.