What are the prevailing principles of mutual funds?
The basic principles prevailing the mutual funds are listed below: Risk diversification principle Thanks to this principle, mutual funds may disperse the risk to the extent that individuals cannot do personally. Let’s assume that you have TL 100.000. You can invest this amount only in a few stocks (because stocks traded in stock exchange are not traded under a certain amounts/lots.). This will increase your risk. For example, the probability of the financial deterioration of 2 companies the stocks of which you purchased and decrease of the value of their stocks is much higher than the decrease of the values of 25 separate companies concurrently. On the other hand, mutual funds can collect money from thousands of people and create portfolios in values of trillions of Turkish Liras. As a result, they have the opportunity to make investment in much more stocks and also other securities, for example in bond and bills, thereby reducing the severity of any impact that may occur due to any de
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