Invest in mutual funds with built-in diversification

You can diversify your portfolio quickly and easily across many different securities, which can help reduce risk. Mutual funds have low maintenance fees and require small initial investments, so you get cost-effective portfolio management and start investing with as little as $1.

Mutual fund managers combine several securities into one investment portfolio. Investors buy shares of the fund and managers use that capital to invest according to the fund’s objective. Based on the performance of the underlying investments, the value of the fund increases and decreases over time and investors gain or lose capital as a result.

The most common mutual funds are stock or equity funds and bond or fixed-income funds, which target one type of asset. Balanced funds invest in a mixture of stocks and bonds, while money market funds focus on short-term investments issued by the U.S. government or U.S. corporations with high credit ratings.

Passively managed mutual funds aim to provide returns that closely match the performance of a market index like the S&P 500. Actively managed funds typically attempt to outperform an index. This investment approach requires more research and trading than passive management, which often has lower fees.

Capital gains are the profits investors make when a fund sells a security that has gone up in price. These profits are the difference between the purchase price and the selling price, they are distributed to investors proportionally and have a capital gains tax rate.

Start by opening an IRA or general investment account. To invest in a mutual fund, you can work with a J.P. Morgan Advisor or use our Self-Directed Investing tool.

When investing in mutual fund please consider the investment objectives, risks, charges, and expenses associated with the funds before investing. Investment can lose value and those losses are not covered by SIPC.

Some examples of risks to consider are:

Mutual Funds tend to have higher expense ratios and sales charges, because they are actively managed by a portfolio manager, when compared to other investment types which can offset gains.

Tax inefficiency concerns may arise if there are distributions from the funds at the fund management's discretion. This will trigger a tax event for the owner of the mutual fund.