Mutual Funds
A mutual fund is an investment vehicle that pools money from investors and invests in a diversified portfolio of securities, including stocks, bonds, short-term money market instruments, and or other securities.
A mutual fund Investor is, basically, a unit holder who buys units of the fund; each unit represents a proportionate ownership of all securities owned by the Fund.

Fund's Objectives and Types
A fund's objective is to embark on the goals the fund seeks to achieve. This affects their allocation of shares, bonds, and deposits in the fund's portfolio (Asset Allocation).

• A fund seeking growth will principally be invested in shares.
• A fund seeking income, will principally invest in fixed income investments such as government bonds, corporate bonds, treasury bills, and bank deposits.
• A balanced fund, will principally invest in shares as well as in bonds 50:50.
• An Islamic fund, offers diversified portfolio of Shariah compliant companies in diverse business sectors.

Funds can also be closed-ended or open-ended. CIB, currently, issues open-ended funds; those that allow investors to purchase and redeem certificates and therefore new shares are consistently offered to the public.

• The price of the fund is calculated on a daily basis.  
• The Net Asset Value (NAV) is the value of the underlying portfolio of the mutual fund (price of the unit fund.)
• When an investor wishes to sell their shares, the mutual fund will purchase the shares back at their NAV.

Mutual Funds Investors

• Investors who do not have the experience or the time to invest their capital on their own and wish to have their money managed by experienced professional investment managers.
• Investors interested in obtaining good returns on their money with lower risks in short or medium term.
• Investors seeking instant liquidity of their investments when needed.

To determine the most suitable fund to meet your investments objectives, you should understand and acknowledge: 

• Your investment time horizon
• Your investments objectives
• Your risk tolerance

Advantages of investing in Mutual Funds

Professional Management:
The money accumulated in a mutual fund is managed by professional investment managers who choose investments that best match the fund's objectives.

Diversification of the Portfolio:
The idea behind diversification is to invest in a large number of assets, from a variety of companies operating in a broad range of industries to mix a wide variety of investments within a portfolio. It is spreading out investments to reduce risks since the fluctuations of a single security have less impact on a diverse portfolio; diversification minimizes the risk of a single investment. Also, most investors would find it expensive and difficult to construct as diversified a portfolio as that of most mutual funds.

Liquidity:
Just like an individual stock, a mutual fund allows you to redeem your investment (convert shares into cash) at any time you request.

Simplicity:
Mutual funds offer investors a simple, convenient, and fast method of investing in a diversified portfolio of securities.