THE ROLE OF MUTUAL FUNDS

The role of Mutual funds is to provide access to financial markets to small private investors but other than than, let's discuss the role it gives to our country. 

Help in the Development of the Capital Markets

Mutual funds can play a vital role in the development of the capital markets of our country by mobilizing funds from thousands or even millions of investors and by converting short-term savings to long-term sources of funds. These funds can then be used to finance long-term projects and to sustain the country's economic growth.

Stabilize the Domestic Financial Market
Time and again, we have witnessed the sudden and seemingly irrational movements in our stocks, bonds and money markets due to the massive inflow and outflow of foreign portfolio funds. A sizable local mutual fund industry can help stabilize securities prices by protecting fundamentally sound issues from speculative attacks.

Promote Savings & Investments

Mutual funds are generally sold as medium to long-term investment instruments. They, therefore, help promote savings and investments, and encourage people to plan for their financial future.

Wealth Distribution

Because of their low initial investment requirement, mutual funds provide investors of moderate means access to securities that offer relatively better returns - securities (like Treasury Bills, commercial paper, and stocks) that small investors would normally not have access to because of their limited financial resources. Mutual funds gives small investors the opportunity to participate in and benefit from the economic gains of the country, thereby contributing to our government's effort towards a more equitable distribution of wealth.

Generate Revenues for the Government

Mutual funds also help generate revenues for the national government as well as local government by the way of taxes. These include documentary stamp tax, corporate income tax, stock transaction tax, final withholding tax, municipal tax, mayor's permit, etc.

Provide Employment

Mutual fund provides job to thousand of people: mutual fund investment solicitor, portfolio managers, traders, research analysts, accountants, clerks, support personnel, administrators, auditors, brokers, custodians, transfer agents, etc.

Source: PIFA, SEC