1. Diversification

This can be one of the biggest advantages of investing in some mutual funds that are designed to diversify its investments. By buying fund shares and effectively pooling your money with other investors, you can spread your investment bets more widely than if you were purchasing individual securities on your own. You can also tap into foreign markets—including emerging markets—that are often difficult for individual investors to access. A mutual fund’s diversification doesn’t guarantee you won’t lose money, but it can reduce the day-to-day volatility in your investment’s value and it makes it less likely than investing in individual stocks that your entire investment would be wiped out.