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02 Why do people use mutual funds?
Many people purchase mutual funds because they are a convenient and cost
effective method of obtaining diversification and professional management.
Because mutual funds hold anywhere from a few securities to several
thousand, risk is spread out over a number of investments. Additionally,
mutual funds generally buy and sell securities in volume, which allows
investors to benefit from lower trading, management and research costs.
Another advantage that mutual funds offer is that fund performance is subject
to frequent reviews by various publications and rating agencies, making it possible
for investors to conduct direct comparisons between funds.
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