Diversification

• Asset diversification is an investment strategy that helps lower your risk by spreading your investment dollars over a number of different types of securities and asset categories. This allows different types of investments in your portfolio to move up and down due to changes in market conditions, while protecting you against significant losses. Most individual investors do not have the resources to obtain a properly diversified investment portfolio. By pooling your investment dollars with other investors in a pooled investment such as a mutual fund, you can obtain a diversified portfolio.
  
  

Professional Management

• Pooled funds are typically managed by a professional financial manager or financial management team. Most individual investors do not have the time or expertise to devote to learning about a wide variety of investment products. Most individual investors also do not have sufficient incomes to justify hiring an investment manager. Pooled funds, such as mutual funds, provide individual investors with access to professional management of their funds.
  
  

Liquidity

• Pooled investment vehicles, such as mutual funds, unit investment trusts and closed-end funds, are typically traded at their net asset value. Shares of such funds do not trade on the secondary market in the same way stocks or bonds are traded. They are purchased from and redeemed by the investment company. You can typically redeem your shares of a pooled investment on any business day at the fund's current net asset value.
  
  

Considerations

• Pooled funds give you access to a diversified portfolio, but you have no direct input as to the specific securities the fund's management buys with your investment. Pooled investments give you access to professional management, but the fund typically pays the manager a percentage of its assets as a management fee. Funds in pooled investments, such as mutual funds and unit investment trusts, are not insured by the Federal Deposit Insurance Corporation or any other federal agency. Shares of pooled investments may decrease in value and you may lose some or all of your investment.