Introduction to mutual funds
February 22, 2020

In the simplest terms, a mutual fund is managed product that pools money from different investors for the purpose of trading securities and earning a profit. The fund’s designated portfolio managers are responsible for managing the investments within the fund on an on-going basis and with accordance to the fund’s objective. Typically, those managers possess the financial knowledge, experience, and tools required for the task and for that reason, we find many investors who are attracted to investing in mutual funds.

When you invest money in mutual funds, you’re buying units of it. These units allow you to participate proportionally in the gains or losses of the funds’ portfolio. If the securities within the overall fund increase in value, individual units will increase as well and investors earn a profit. On the other hand, if securities within the fund decrease in value overall, individual units will decrease as well and investors would incur a loss.

  • Mutual fund types

    There are several types of mutual funds to choose from based on your risk tolerance, goals, and objectives. Generally, mutual funds fall into different categories based on the type of investments that are being traded within them:

    1. Money market funds: invests in short-term, fixed-income securities such as government bonds, treasury bills, bankers’ acceptances, and commercial papers
    2. Fixed income funds: invests in fixed-income securities such as government bonds, investment-grade corporate bonds, and high-yield corporate bonds
    3. Equity funds: invests in equities (stocks)
    4. Balanced funds: invests in a mix of equities and fixed-income securities
    5. Index funds: these funds are designed to track and invest in a particular index
    6. Specialty funds: these funds invest in specific industries or sectors

  • Trading mutual funds

    To trade mutual funds, follow the steps below:

    1. Log in to Questrade Trading
    2. In the top navigation menu, click MUTUAL FUNDS
    3. Visit our Mutual fund centre for your research needs
    4. Once you're ready, click BUY/SELL to make a trade

  • Important to know

    Here are some key things you should know about trading mutual funds:

    • Orders placed before 1 pm EST are processed on the same day that the order was placed. Orders placed after 1 pm EST will be queued for processing on the next business day
    • Most mutual funds have a settlement time of T+2 business days
    • The commission charge for a mutual fund is $9.95 per trade
    • Most mutual funds have a margin requirement of 50%
    • To switch mutual funds within the same mutual fund company, call our Trade Desk at 1.866.980.9590, Monday to Friday, 8 am to 4:30 pm ET

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