Mutual funds are an extremely effective way to save and invest. They are professionally managed investment schemes that give individuals easy access to global financial markets. The investment objectives and scope of different funds varies; some aim to provide steady returns by investing in bonds and cash, whilst others aim to achieve high capital growth by investing in stock markets or particular sectors, such as technology.
Mutual funds have many advantages and are an extremely popular investment choice for millions of people around the world.
- Easy - You decide which funds to invest in and then professional managers take care of all the day-to-day decisions, so you don't have to watch the markets constantly.
- Hassle-free - You do not have to spend time doing stock research or administration work, such as stock settlements and splits or foreign exchange, yourself.
- Affordable - Start investing in global markets from a lump sum of as little as HK$5,000 (through J.P. Morgan eTrading) or HK$1,000 per month through our monthly savings plan.
- Flexible - Tailor-make your own investment portfolio to suit your changing needs and circumstances with the wide range of funds on offer.
- Good growth potential - With professional fund managers working for you to identify the best investment opportunities worldwide, you can diversify your investments and benefit from high growth potential.
- Risk reduction - Mutual funds generally invest in some 50 to 100 different securities, often covering several different markets at once. This gives much more diversification than you can generally achieve on your own.
- Liquidity - As you can buy and sell your funds at any time, you have full control of your investments and access to your money.
- Low maintenance - With mutual funds you can stop worrying about your investments, concentrate on your career and family and spend your spare time doing the things you really enjoy!
Not at all. You're always in control. First, you decide which funds to invest in, depending on your investment objectives. Secondly, you can usually cash in or switch to other funds on any business day. Thirdly, it's easy to keep track of your investments. J.P. Morgan Asset Management gives you 24-hour access to information on your investment and daily fund prices, you will also receive regular, easy to read statements.
When you invest in a fund, your money is pooled with that of many other investors. A professional fund manager then invests this pool of money in a wide range of securities. Mutual funds are divided into shares or 'units'. Those units belong to the investors in the fund. The number of units you are allocated depends on how much you invest. Unit prices are set each business day, according to the value of the fund's investments at the close of the previous day.
Mutual funds can invest in all three types of financial assets - stocks, bonds and cash (money on deposit) all over the world. Some funds may also use other investment tools such as futures and options.
Mutual funds offer you full liquidity and access to your money. You can buy and sell your fund investments on any dealing day (most business days). The redemption proceeds will normally be paid within three to five days after you sell.
One of the greatest advantages of mutual funds is their affordability. You can start from as little as HK$5,000(through J.P. Morgan eTrading) or HK$1,000 per month through our monthly savings plan.
Your choice of funds should always be driven by what you're investing for and for how long. Setting a time frame is crucial because this will dictate your investment strategy.
Ask a professional investment adviser to help you identify your goals and set up a portfolio of funds. Generally, funds can be broadly categorised as follows:
| Different Investment Categories |
| Investment | Objective | Characteristics | Why Invest? | Likely Performance |
| Money Market Funds | Capital Preservation |  | Low risk | | Returns may not always outpace inflation |
| | For short-term interest earning needs | | "Safe haven" | | Place to park money pending future investment opportunities |
| | Interest bearing, similar to bank deposits | | Potentially higher yields and daily liquidity |
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| Bond Funds | Income and Capital Preservation | | Low to moderate risk depending on type of bond | | Returns greater than money market funds, exceed inflation |
| | Preserving capital and generating income from interest | | Provides good diversification for stock portfolios to provide greater stability |
| | Stable growth from interest income and capital appreciation |
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| Equity Funds (stock market) | Growth | | Moderate to high risk | | Long term returns usually exceed inflation | | Typically greater returns than bonds |
| | For long-term growth. Money to be used after at least 3 years |
| | Stocks have historically outperformed both bond and cash deposits over the long term | | Can be volatile over short periods |
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Returns from normal mutual funds are not guaranteed, since the value of units fluctuates according to the fund's investments. Seek professional advice to ensure that your investment portfolio suits your risk tolerance.
There are, however, legal controls to safeguard investors' assets in mutual funds. First, the Hong Kong Securities and Futures Commission authorises funds and determines the acceptability of fund managers and investment advisers. Hong Kong-authorised funds must be structured in such a way that once bought, your units can never be taken away from you (unless, of course, you wish to sell them). Secondly, every fund is required to appoint trustees to ensure that investors' funds cannot be misappropriated. Thirdly, reputable fund houses, like J.P. Morgan Asset Management, employ rigorous internal controls and state-of-the-art technology to keep track of investors' accounts.
Mutual funds enable ordinary investors to employ the same risk-reduction strategies that are normally only available to very large investors:
Asset allocation - Different types of assets move in different ways and mutual funds allow you to spread your money around all of them. High quality bonds, for example, might do well when stock markets are falling. By allocating your portfolio to shares, bonds and cash you can reduce risk and enjoy the levels of growth potential and stability you require.
Diversification - Unlike direct ownership of a few stocks, mutual funds invest in many different stocks and in a lot of cases many different markets. This means that a price drop in one stock or market will not hurt as much as it would if the portfolio consisted of only a few stocks from the same market. Remember, no single market is best (or worst) every year.
| The world's best performing stock markets in the last 10 years |
| Year | 1st | 2nd | 3rd |
2006 | China | Indonesia | Morocco |
2005 | Egypt | Columbia | Jordan |
2004 | Columbia | Egypt | Hungary |
2003 | Thailand | Turkey | Brazil |
2002 | Pakistan | Czech Republic | Indonesia |
2001 | Russia | Korea | Colombia |
2000 | USA | UK | Turkey |
1999 | Turkey | Russia | Finland |
1998 | Korea | Finland | Greece |
1997 | Turkey | Russia | Hungary |
1996 | Russia | Hungary | Egypt |
Source : MSCI AC World Gross Total Returns from Thomson Datastream in US$ terms.
Make sure you select a fund house that can meet these key requirements:
To get started, simply contact our friendly Investment Advisers today on 2265 1188 or visit our J.P. Morgan Investment Centre in Hong Kong:
Walkway Level, Jardine House, Central
Open Mon-Fri 8.30 am to 7.00 pm; Sat 8.30 am to
1.00 pm
G62, E Plaza,
Legend Tower, 7 Shing Yip Street, Kwun Tong
Open Mon-Fri 10.00 am to 8.00 pm; Sat&Sun
12.00 am to 4.00 pm
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