Mutual Funds
Mutual funds offer instant diversification, professional management, and access to a wide range of markets—all in a single investment. They are one of the most popular investment vehicles in Canada.
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What is a mutual fund?
A mutual fund (also called a mutual investment fund) is an investment vehicle that pools money from multiple investors to purchase a wide range of securities—stocks, bonds, money market instruments, and other assets. It is managed by professionals who seek to maximize returns while minimizing risk.
It's one of the most accessible ways to invest in the financial markets, even with modest amounts. Rather than buying individual securities, you gain access to a complete portfolio with a single purchase.
Diversification
Access to hundreds of securities in a single purchase to reduce risk
Professional management
Expert managers monitor the markets and make the decisions
Liquidity
Easy buying and selling at daily net asset value
Advantages of mutual funds
Instant diversification: A single mutual fund can contain hundreds of securities spread across different sectors, countries, and asset classes. This diversification significantly reduces risk compared to buying a few individual securities.
Professional management: By investing in a mutual fund, you benefit from the expertise of portfolio managers who monitor the markets, conduct in-depth research and make informed decisions on your behalf.
Accessibility: Unlike direct purchase of shares or bonds, mutual funds are accessible with relatively modest amounts, making them ideal for novice investors.
Liquidity: You can buy or sell your shares at the daily net asset value (NAV), offering considerable flexibility.
Income: Mutual funds can generate income in the form of dividends, interest, or capital gains, which can be automatically reinvested or distributed.
Types of mutual funds
Equity fund: They invest primarily in stocks. Higher return potential but with greater volatility. Ideal for a long-term investment horizon.
Bond funds: They invest in fixed-income securities. Less volatile than equity funds, they offer regular income and greater stability.
Balanced funds: They combine stocks and bonds in a single portfolio, offering a balance between growth and stability.
Money market funds: They invest in very safe, short-term instruments. Modest returns but very stable capital — similar to a GICs in terms of security.
Specialized funds: They focus on a specific sector (technology, healthcare, real estate, etc.) or geographic region. Riskier but can offer higher returns.
Tips
Mutual funds can be held in all types of accounts: TFSA, RRSP, RESP, RRIF or unregistered accountThe type of account influences taxation, not the choice of fund.
Mutual funds vs. segregated funds
The Segregated funds They share several characteristics with mutual funds, but also offer capital guarantees (75% or 100%), inheritance protection, and creditor protection. In return, their management fees are slightly higher.
The choice between the two depends on your situation: if you value security and estate planning, segregated funds are worth considering. If you prioritize lower fees and don't need these protections, traditional mutual funds are an excellent choice.
Costs and considerations
Management expense ratio (MER): Each mutual fund has annual management fees, expressed as a percentage of the fund's assets. These fees cover the manager's remuneration, administration costs, and monitoring commissions paid to the advisor.
Buyback fees: Some funds charge fees if you sell your shares within a specific timeframe (usually the first few years). Others have no redemption fees.
Performance: Past performance is not indicative of future returns. At Gestalt, we compare similar mandates, considering style, economic context, and geography to select the best funds for each portfolio.
How to choose the right fund?
Selecting a mutual fund should be based on your financial objectives, risk tolerance, investment horizon, the fund's historical performance, and associated fees. Our advisors They guide you in this selection by offering solutions based on your personal objectives.
Our approach
At Gestalt Financial Group, our portfolio choices are based on a combination of fundamental and technical analysis, as well as in-depth research. A comparison of similar mandates is performed for each selected fund, considering management style, the economic context, and geographic allocation.
Everything you need to know about mutual funds
A mutual fund pools money from several investors to buy a wide range of securities (stocks, bonds, etc.), managed by professionals who seek to maximize returns while reducing risks.
Instant diversification, professional management, high liquidity, accessibility with small amounts and the ability to choose from different risk levels.
Segregated funds offer capital guarantees (75% or 100%), estate planning protection, and creditor protection. In return, their fees are slightly higher than those of mutual funds.
Income can be taxed as dividends, interest, or capital gains. In a registered account (TFSA, RRSP), taxation is deferred or eliminated.
Most mutual funds offer high liquidity. You can sell your units at the daily NAV. However, some funds may have redemption fees in the first few years.
Yes, like any investment, value can fluctuate. Diversification reduces risk, but does not eliminate it. For capital protection, consider segregated funds or GICs.
The choice depends on your financial objectives, risk tolerance, historical performance, fees, and the manager's expertise. An advisor can guide you.
Mutual funds are eligible for all types of accounts: TFSAs, RRSPs, RESPs, RRIFs, and non-registered accounts. The type of account affects taxation, but not the choice of fund.
Absolutely. Diversifying across multiple funds helps to spread risk and target different sectors or markets according to your objectives.
Our choices are based on fundamental and technical analyses, with a comparison of similar mandates considering management style, performance, economic context and geographical distribution.
Mutual funds have an annual management expense ratio (MER) that covers management, administration, and commissions. Some funds may also have redemption fees in the early years.
Diversify your portfolio with mutual funds
Whether you are a beginner in investing or wish to refine your investment strategyOur advisors can help you select mutual funds that match your objectives.
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