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Mutual Fund Objectives

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Mutual Fund Objectives

The mutual fund prospectus is your best guide to a fund's objectives—i.e., what kind of performance the fund seeks to achieve. The objectives will guide the decisions of the fund's managers, and determine what kind of returns you can expect on your investment.

Things To Know

  • The section on objectives tells you what the fund is seeking to obtain for its shareholders.
  • Use this section to gauge whether the fund fits your investment strategy.

What can you learn from the Objectives section?

The investment objectives of the fund are stated in their own section. The title of the section may be "Investment Objectives" or "Investment Policies" or something similar. The section outlines the fund's investment philosophy and strategies so that investors know what a fund is seeking and how it intends to achieve it. The section on objectives tells you what the fund is seeking to obtain for its shareholders. For example, the objective of an income fund may state, "The XYZ Bond Income Fund seeks a high level of current income with a low degree of share-price fluctuation."

The example objective above tells investors these two things:

  • The level of income the fund seeks (high, moderate, or low)
  • How stable it wants its shares to stay

Understanding the fund's objectives will help you determine whether a particular fund fits with your investment strategy.