The Mutual Fund Advantage

Many people who don't have the time, know-how or money to assemble a portfolio of individual stocks or bonds rely on mutual funds for their investment needs. Mutual funds offer a convenient and affordable way for individuals of all means to become investors.

A mutual fund is a company that pools the assets of thousands of investors together in one portfolio. Depending on their stated objective, mutual funds may invest in stocks, bonds or other securities – or a combination of them. When you invest in a mutual fund, you purchase shares of the fund at the fund's net asset value (NAV). A fund's NAV represents the value of all the securities held in the portfolio divided by the number of outstanding shares, which may change daily.

Mutual funds offer investors many benefits, including:

• Professional management: Experienced investment professionals are responsible for building and managing mutual fund portfolios. Often, these are the same experts responsible for managing large corporate and institutional investment portfolios.
• Diversification: Investing in a variety of securities—or diversifying your portfolio—may be the best way to enhance return potential while limiting risk. Mutual funds typically invest in dozens of securities, offering broad diversification from a single portfolio.
• Variety: There are mutual funds to suit nearly every investment objective, from long-term growth, to current income to principal stability. And for each objective, you'll find funds practicing different strategies and tactics in pursuit of that objective.
• Low cost: Because they pool the resources of many investors with similar investment objectives, mutual funds offer a low-cost way to own dozens of securities. The costs associated with mutual fund investing represent only a fraction of the costs you'd incur buying and selling securities on your own.
• Liquidity: You always have access to your mutual fund assets. You generally may redeem shares at their current NAV and receive your proceeds the next business day.

There are various types of mutual funds designed to meet different goals and risk preferences. For example:

• If you have several years to invest, you may want to consider more aggressive mutual funds, such as those pursuing long-term growth potential by investing in small-company or emerging-market stocks.
• If you are nearing retirement, you may want to limit your exposure to risk, focusing on more conservative growth portfolios, such as growth and income funds or balanced funds.
• If you are retired, you may want to keep a majority of your money invested in fixed income mutual funds to meet your regular income expenses. At the same time, you may need to keep some exposure to growth-oriented mutual funds to maintain your purchasing power.

BB&T mutual funds span the risk reward spectrum to help you meet a broad range of financial goals.