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How do Mutual Funds work?

The basics of investing in Mutual Funds

Updated over a week ago

Plum Investments allow you to also invest in "Mutual Funds", which means you to invest in lots of different companies via one fund. Usually, these require large investments and have additional charges like transaction costs, but with Plum you can trade without any transaction costs and make investments as small as £2.99 per month.

You can read more about fees here.

You can also read more about how funds work here.

When you invest in a fund, you own part of the companies in that fund. If the companies these funds are invested in do well, then your funds make money because your share in these companies increases in value. Plus, when these companies pay out profits to shareholders, this is added to the value of your fund 📈

If these companies don't do well, then these funds might lose value or pay out less profits 📉 This is why investing involves risk.

To give you an idea of how risky a fund is, you can see the industry recognised risk score (1-7) on the fund pages. The higher the score, the higher the risk.

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