As part of our investment management services and process, Schuster Boyd McDonald may recommend Mutual Funds. We regularly review the funds we recommend to ensure continued suitability, competitive performance, adherence to fund mandates, and changes in management.
A mutual fund is an arrangement under which shares or units are sold to raise capital. Investors purchase units if the mutual fund is a trust or purchase shares if the fund is a corporation. When you invest in a mutual fund, your money is pooled with the money of other investors and invested on your behalf by the fund manager.
Mutual fund trusts and corporations are also known as flow-through entities. For tax purposes, a flow-through entity treats the taxable income earned inside the entity as if you held the investments directly, instead of through the fund. The income that is distributed, or flowed out to you, keeps its identity. For example, dividend income remains dividend income, and capital gains remain capital gains when they are flowed out (or distributed) to investors.
To learn all the facts, please contact us.
Source: Canada Revenue Agency
Understanding mutual fund trust distributions In order to understand mutual fund trust distributions, you first need to understand how mutual fund trusts work.
When you invest in a mutual fund trust, the fund managers invest your money, along with the money of all the other unitholders (investors in the fund), in a portfolio of investment assets that might include equity securities (stocks), debt securities (bonds), Treasury bills and more.... Learn more
Benefits of Mutual Fund Investing
1. Professional money management
The pool of money that investors contribute is invested by experts in the financial markets. These money managers have the knowledge and information necessary to make informed investment decisions according to the fund’s objectives.
Because investors contribute to a large pool of money, managers can easily diversify between many individual securities, so fund returns are not heavily dependant on the ups and downs of a few select investments.
Mutual funds are very convenient since they can be quickly bought and redeemed. Investors should read the simplified prospectus of the mutual funds they own for further details.
Depending on your financial goals and tolerance for risk there are a wide range of mutual funds available to you. Please seek the advice of an advisor to ensure that the investment you choose complements your overall financial plan.
The mutual fund company does all the record-keeping, providing regular reports and the appropriate tax forms for your investments.