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One of the advantages of mutual funds is the fact that they allow for the diversification of your investment portfolio. Many investors pool resources in a mutual fund investment for the sole purpose of making profits. However, in order to avoid losses, the investors put their money into sectors that are not related, such that, when one investment goes down, its effect on the overall performance of the portfolio is balanced by the one that will make profit, or the one one that will stay stable.

As an investor, in order for to diversify your investment, you need to invest your money in a wide range of investment options ranging from stocks, bonds, money market securities to real estate and business opportunities. This is made possible through investment in mutual funds, where managers of the fund monitor and measure the performance of the pool against the odds that face the investment. These managers, do these by allocating part of the resources available to stocks, part to bonds and part to real estate among other investments.

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Question by clarklb: are energy mutual funds still a good investment?

Best answer:

Answer by ybhviper
I would say sugar and oil for sure. BUT if you need that money dont invest in energy funds as it is very volitile to risk so it could be down 10 percent one day and up 20 another. So if your gonna invest in energy do some reading most of them have redemption fees if sold under a year. Id advise against it unless you already have other investments.

Know better? Leave your own answer in the comments!

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Question by money_hungry: how long do you guys out there think, the energy (stock/Mutual Funds) rally will last)..?
past couple of years energy funds are returning 40-60% yearly..
Do you think it will continue through 2006 year end?

And besides energy, what are other sector funds/stock-picks that might be good to get into at this time?

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