What are Mutual Funds?

Mutual Funds invest your money for you. You give your money to the bank or to the life insurance company and they will put it in bonds or stock market or combination of both such as Stock Market Mutual Funds and Unit Investment Trust Funds.

Two Types of Mutual Funds
1) Actively-Managed Funds. Funds managed by a manager, a fund manager who will invest your money in stocks. People invest in actively-managed funds because the goal of fund managers is to beat the index.

2) Passively-Manage Funds. Also known as Index Fund. Every stock market has an index. An index is a list of companies that represent how well the stock market is doing. In the Philippine context, the index is the Philippine Stock Exchange Index (PSEI). The index tries to mimic the performance of the stock market using a computer. People invest in index funds because they think it’s safe.