Exploring Mutual Funds

What is a Mutual Fund?

A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities such as stocks, bonds, money market instruments and other similar assets. Mutual funds are operated by licensed managers, who invest the fund’s capital and attempt to produce capital gains and income for the fund’s investors. A mutual fund’s portfolio is structured and maintained to match the investment objectives stated in its prospectus.

One of the main advantages of mutual funds is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities, which would be difficult (if not impossible) to create with a small amount of capital. Each shareholder participates proportionally in the gain or loss of the fund.

Mutual funds experienced rapid growth in Canada in the late 1980s, and have remained a popular investment option. According to research conducted by the Investment Funds Institute of Canada, 34.4% (4.6 million) Canadian households currently hold mutual funds. The same research also found that Canadians have greater confidence in mutual funds (85%) than other financial products such as GICs (64%), bonds (55%) and stocks (65%).

 

mutual funds

Regulation

The Mutual Fund Dealers Association of Canada (MFDA) is the national self-regulatory organization (SRO) for the distribution side of the Canadian mutual fund industry. As an SRO, the MFDA is responsible for regulating the operations, standards of practice and business conduct of its Members and their representatives with a view to enhancing investor protection and strengthening public confidence in the Canadian mutual fund industry.

The MFDA’s functions include:

  • Setting regulatory standards for its members
  • Auditing members for compliance with those standards
  • Investigating complaints
  • Taking enforcement action when necessary

Mutual Fund Representatives

Mutual Fund Sales Representatives (MFSRs) are employed throughout the financial services industry by mutual fund dealers and independent financial planning firms. Personal Banking Representatives and many Insurance Sales Agents may also become licensed to sell mutual funds.

People who sell or give advice about mutual funds must be registered, through the sponsorship of a dealer, with the provincial securities commission in each province where they want to sell mutual funds.

A dealer, or retail distributor, must be registered with the appropriate securities commission(s) and, depending on the jurisdiction and the types of securities the dealer can sell, it may have to be a member of the Mutual Fund Dealers Association (MFDA) or Investment Industry Regulatory Organization of Canada (IIROC).

Ashton College currently offers a Canadian Investment Funds Course (CIFC) that is delivered in partnership with the Investments Funds Institute of Canada (IFSE).This course is designed to provide students with a solid foundation for becoming a mutual fund dealing representative. This nine-week includes eleven modules, including portfolio management and an exploration of mutual funds. If you are interested in learning more about advancing your career in financial services, and would like to learn more about the CIFC program, click here.

 

References

Investment Funds Institute of Canada
Investopedia
The Mutual Fund Dealers Association of Canada

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  1. M ahmad says:

    What a reputed educational institution

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