How Mutual Funds Work

Imagine the work associated with picking hundreds of stocks as part of an investment strategy. Between investigating the companies, timing the market and finding the right mix, it may take you a significant amount of time and effort to put together a portfolio that works for you. Mutual funds might be an easier solution. One fund can potentially offer exposure to many company stocks or bonds.

Simple and diverse

Mutual funds are made with the individual investor in mind. Funds are set up so investors can buy shares of a portfolio of stocks or bonds – each share representing a slice of investments across all stocks and or bonds in the fund. Individual investors can enjoy the advantage of a diversified portfolio this way.

Priced to purchase

Each day, the price per share of the fund, or Net Asset Value (NAV), is calculated by aggregating the value of all the stocks, bonds or securities in the fund and dividing it by the number of shares owned. The price per share is only calculated once per day and it is at this closing price that trades are executed. It creates a simple way for investors to own a portfolio for less than it might cost to own each of the underlying stocks or bonds individually.

You may not have the time or resources to choose stocks or bonds wisely on a daily basis and change their mix. This is a primary reason why you might choose to invest in actively-managed funds. But what does it mean when a fund is "actively managed?"

Expertise on a daily basis

Investors in mutual funds take advantage of a portfolio manager’s years of expertise, a wealth of information and intense industry research. Janus Henderson’s actively-managed funds leverage full-time teams of investment professionals who aim to develop a deep understanding of the companies owned, seek to anticipate change, create independent and differentiated views based on in-depth primary research, and invest with clients’ interests first. Successful portfolio managers demonstrate a track record of strong results and often have a personal ownership in the funds.

Active has advantages

Active investing means seeking out investment opportunities at the appropriate level of risk for each fund. A good manager not only seeks new investment opportunities, but also looks to avoid areas of concern. At Janus Henderson, our active approach is collaborative. Our teams of industry experts work together and debate new ideas, key risks and work to deeply understand the companies in which we invest with the goal of creating the best possible investor outcomes.

Because mutual funds are such large collections of securities, they can take on a personality of their own. This personality can include the type of companies they focus on (like technology, healthcare or foreign), or the investment goals they pursue (like long-term capital appreciation or wealth preservation). All of the underlying stocks and bonds in Janus Henderson funds have been heavily researched by our investment professionals from the big picture to the tiniest detail and they each offer different options for investors.

Which fund is right for you? The answer may depend on your goals.

Learn more on building a sound portfolio.