A mutual fund pools the money of people who have a similar investment objective, such as long-term growth or steady income. When you buy shares in a mutual fund, you and the other investors participate in the gains and losses of the fund’s investments.
The fund’s investment adviser manages the fund and invests in securities that meet the fund’s investment objective, including:
The mutual fund’s investment adviser takes the pool of money in the fund and purchases a variety of securities. All of the fund’s investors then own a proportionate share of each security. When mutual fund investors are ready to sell their shares, the fund is required to pay that day’s net asset value for each share redeemed.
A mutual fund can gain value when the securities it owns pay interest or dividends or when the securities themselves rise in value.
There are many advantages to mutual funds, including:
Most financial professionals suggest that investors balance their portfolios by investing across several types of investments. Which mix is right for you? That depends on a number of things — including your investment time horizon, risk tolerance and financial circumstances.
American Funds offers funds with an array of investment objectives to help you and your financial professional build a portfolio tailored to your needs.
Investments are not FDIC-insured, nor are they deposits of or guaranteed by a bank or any other entity, so they may lose value.
You could lose money by investing in the American Funds Money Market Fund. Although the fund seeks to preserve the value of your investment at $1.00 share, it cannot guarantee it will do so. An investment in the fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. The fund's sponsor has no legal obligation to provide financial support to the fund, and you should not expect that the sponsor will provide financial support to the fund at any time.
Investors should carefully consider investment objectives, risks, charges and expenses. This and other important information is contained in the fund prospectuses and summary prospectuses , which can be obtained from a financial professional and should be read carefully before investing.
The return of principal for bond funds and for funds with significant underlying bond holdings is not guaranteed. Fund shares are subject to the same interest rate, inflation and credit risks associated with the underlying bond holdings. Lower rated bonds are subject to greater fluctuations in value and risk of loss of income and principal than higher rated bonds.
Investing outside the United States involves risks, such as currency fluctuations, periods of illiquidity and price volatility, as more fully described in the prospectus. These risks may be heightened in connection with investments in developing countries. Small-company stocks entail additional risks, and they can fluctuate in price more than larger company stocks.
Investment allocations for funds of funds may not achieve fund objectives. There are expenses associated with the underlying funds in addition to fund-of-funds expenses. The funds' risks are directly related to the risks of the underlying funds, as described herein. Although the target date funds are managed for investors on a projected retirement date time frame, the fund's allocation strategy does not guarantee that investors' retirement goals will be met. The target date is the year in which an investor is assumed to retire and begin taking withdrawals. American Funds investment professionals actively manage the target date fund's portfolio, moving it from a more growth-oriented strategy to a more income-oriented focus as the fund gets closer to its target date. Investment professionals continue to manage each fund for 30 years after it reaches its target date.