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Securities

Please contact the WLD Financial Services Ltd. offices at Williams Lake and District Credit Union.  They will be pleased to provide you with more information.

A mutual fund is a number of investors pooling their money to invest stocks, bonds and other accounts. Because your money is combined with a large number of other investors' funds, you have the ability to invest in a huge range of securities. Many of the investments would be unavailable to you otherwise because the minimum cost of investing would be too high for an individual investor.

Mutual funds are professionally managed and are easier to diversify, which makes them less risky than investing in individual stocks. You still have to do your homework and determine what type of stock will best suit your investment goals, but the average investor finds it less stressful to invest in the stock market through this method.

All mutual funds have investment objectives, and they are similar to the objectives of most investments--namely growth or income. And just like other investments, the two categories are not mutually exclusive; however, most funds are likely to focus heavily on one or the other. Some funds buy mainly bonds and other debt securities (fixed-income funds), other focus primarily on stocks (equity funds), and still others are called "balanced" funds because of the mix of securities in their portfolio. Each fund's objective is achieved by investing in the types of securities (for example, corporate bonds, treasury bonds and stocks) that enable it to produce the growth or income results it's aiming for. You can find out about a fund's investment objectives through its prospectus.

A number of funds also operate internationally, which allows you to diversify your investments geographically.

Mutual funds invest in various sizes of companies as well. The size of a company is based on the company's number of outstanding shares in a stock multiplied by its current price. This allows investors to diversify by investing in different size companies.

The following is a list of the terms used to define the size of a company and what the terms mean. While the definitions are not set in stone, the list below will give you a good idea of what size assets your fund is investing in:
  • Giant caps. This term describes companies with a total market value of more than $40 billion.

  • Large caps. This term describes companies with a total market value of more than $10 billion and less than $40 billion.

  • Mid caps. This term describes companies with a total market value of more than $1.5 billion and less than $10 billion.

  • Small caps. This term describes companies with a total market value of more than $250 million and less than $1.5 billion.

  • Micro caps. This term describes companies with a total market value of less than $250 million.
Keep in mind that some mutual funds invest in certain types of securities no matter what their size.

Summary
With more than 4,000 funds available in Canada, choosing the right one is not easy. Your Investment Advisor or Financial Planner studies the content and performance of mutual funds, and will help you identify those most appropriate for your portfolio.

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