Mutual funds are the most popular financial investment tools which provide investors to multiply their savings. In the financial world, mutual funds are fast-growing investment options for investors. In the UAE, the popularity of mutual funds has been increasing at a fast pace. The reason for such growth is because of its simplicity, user-friendliness, simple to handle and various other reasons that make mutual funds the preferred choice.    

Mutual funds are managed by the fund manager who have expert knowledge on individual’s fund, share their knowledge and provide suggestions on the investment options. This expert advice process is done according to the share market fluctuations when to invest, how much to invest, the anticipated returns on investments and other related decisions are advised by the mutual fund managers. 

Mutual funds are flexible, easily accessible and versatile. Mutual funds are wealth accumulation tools and investment vehicles where you can park your earnings. In this article, we discuss mutual funds as to why they are the best investment options. 

Mutual funds are a pool of funds

Mutual funds are a pool of funds that are pooled together by making contributions from different investors. The goal of pooled mutual funds is to multiply and increase savings. As per the investment, the aim of the pooled fund amount which is collected is invested for a long period of time. 

Investors can allocate their money into different portfolios with professionally managed funds. The mutual units collection contributions are further invested in bonds, ETFs, stocks, shares, gold and segments to get good returns. To grow your savings it is the simplest way to invest in mutual funds and see your fund growth. With the support of expert advice investing in mutual funds is a great reliable investment vehicle.   

Categories of Mutual funds

Based on the forms of investments, mutual funds are categorized into the following. 

Equity Funds

It is the most common mutual fund that invests in equity based instruments and stocks.

Debt Funds

In debt funds, the investments are made in steady income instruments. 

Money Market Funds

Money market funds are a short period investment type where market-based instruments are invested.

Hybrid Funds

Hybrid funds are investments that are invested equally in equity instruments and debt instruments. This helps to maintain a balance and reduce the severity of market fluctuations and risk. 

Mutual funds as a best investment option

The following are the reasons why mutual funds are the best investment options.

  1. Easy and simple to manage
  2. Diversity
  3. Flexible in nature
  4. Easy access
  5. SIP approach
  6. Liquidity in nature

1. Easy and Simple to manage

For common people understanding finance is a challenging task. Investors can put their savings and invest in mutual funds. By making the right investments you can see the fund growth and risk associated with the investments. 

2. Diversity

Mutual funds are different and they have their own portfolios. By investing in mutual funds you can diversify the risk as different investment tools have inverse relationships. 

In the UAE, mutual funds are good investments and the investor can make diversified investments in different portfolios. They are different from stocks as purchasing a single mutual fund can create a diversification to the whole portfolio and this individual purchase helps in creating a corpus fund that generates income over a period of time. 

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3. Flexible in Nature

Long term and short term investment goals are the factors that provide investors with an option to have access to different sectors of the market. The investors can invest in short term and also long term growth funds. This flexibility is designed to cater for the needs of the different sectors of the investors so that they can get the benefits of diversification in investments. 

4. Easy access 

There is a huge investment requirement for making an investment in the traditional investment methods. The modern investment options are easily accessible where the investor can invest with a small amount of USD 1000 as an investment into mutual funds. The initial investment being lower makes mutual funds more user friendly investment.

5. SIP approach

Systematic Investment Plan (SIP) is created for the investors who cannot afford to invest lumpsum on the investment. Investors can invest a small amount of money systematically for over a period of time. The investors from all the segments can contribute by investing in units each month to make a pool of investments. 

6. Liquidity in nature

Mutual funds are highly liquid in nature. Liquidity refers to the capacity of converting an asset into cash or a group of assets into cash. Higher the liquidity of assets higher is the convenience. 

For example- Gold is liquid in nature, which means that gold can be easily converted into cash and with higher benefits. Mutual funds are highly liquid in nature because investors can redeem their investments. 

Click here for All about mutual funds in UAE

Investing in Mutual Funds

With the digitisation of banking and the convenience of e-business investing in mutual funds can be done at your fingertips online. Most of the popular banks in the UAE like Emirates NBD, HSBC, CITI bank, Standard Chartered Bank and many other banks provide you with the option of investing in mutual funds. When you buy mutual funds online you can compare the different funds and make the best choice that suits your requirement. 

Before investing in mutual funds experts always recommend you to read all the offer documents carefully before investing. If you need any clarification on the terms and conditions, ask the authorities and invest your money. Banks provide customer care facilities online or you can visit the branch. 

Mutual funds agents can also assist you as they are the experts who can inform you about the trending schemes and policies with their benefits. Mutual fund agents can also assist you in completing the paper formalities and they charge you with the commission fees for their services.

Top Mutual Funds in the UAE

The following are the top mutual funds in the UAE

1. Scottish Mortgage
2. Dunn Capital
3. Fundsmith Equity Fund
4. Fidelity Global Dividend
5. Ardevora Global Equity Funds
6. Fidelity Emerging Market Fund
7. Schroder Mid Cap US Fund
8. Invesco Perpetual Asian
9. Crux European Special Situations
10. M&G Global Macro Bond

Meet the author
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Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.

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Vinay Kumar
Vinay Kumar Goguru is a finance professional with more than 8 years of diverse experience as a researcher, instructor and Industry work experience with both public and private entities. Prior to MyMoneySouq, he spent 6 years in Berkadia, It's a commercial mortgage banking company. He has a "Doctoral Degree in Commerce" and two master's degrees with a specialization in Finance, one as Master of Commerce and other as Master of Business Administration. He has written several articles on personal finance, published by different International journals. He loves traveling, reading and writing is his passion. He has a dream of writing a book on his favorite finance topics.

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