Basic Banking Solutions

Mutual Funds FAQs

What is a Mutual Fund?
Why should I invest in a Mutual Fund?
What are the charges?
How is the price of a Mutual Fund quoted?
How risky is investing in a Mutual Fund?
Who should I contact if I have other question?

What is a Mutual Fund?

A Mutual Fund is a professionally managed pooled investment scheme encompassing investments in equities, bonds and cash. Each Fund comprises a range of investments and is managed by a dedicated Fund Manager. Pooling investments in this way gives you access to a wide range of investment products in a number of different markets.

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Why should I invest in a Mutual Fund?

There are many advantages to investing in a Mutual Fund. These include:

Risk diversification
Even if you only have a small amount to invest, Mutual Funds give you the opportunity to invest in a broad range of stocks and shares, spreading your risk over a variety of products and markets.

Access to global investment opportunities
Buying the equivalent number of stocks and shares individually would be much more expensive because of the transaction costs involved. By investing in Mutual Funds, you can invest in a number of different markets in a much more cost-effective way.
Professional management
Mutual Funds are managed by experienced professionals, so you can invest your money without having to worry about problems that affect many private investors, such as limited investment experience, lack of time and insufficient access to the latest market information.
Low maintenance
Mutual Funds provide the opportunity to invest in equities without the administrative burden of arranging stock settlements, registrations and new share issues.
Flexibility
Mutual Funds can be bought and sold daily, so you can easily switch from one investment style to another should you wish to do so.
Convenience

Tracking the value of your investments is easy because the prices of Funds are quoted on the SABB website and the Tadawul website.

Click to view funds prices

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What are the charges?

The main charges associated with Mutual Funds are:

Front-end charge
This is applied when Fund units are purchased and is included in the Fund’s offer price.
Redemption charge
This is applied when Fund units are sold and is included in the Fund’s bid price. (SABB Funds do not have redemption charges.)
Management charge
This accrues daily and is included in the Fund’s Net Asset Value.
Switching charge
This is applied when unit holders switch holdings between Funds.

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How is the price of a Mutual Fund quoted?

Mutual Fund prices are normally quoted in Net Asset Value (NAV). This is the total value of the assets, after all expenses (e.g. management fees) have been deducted.

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How risky is investing in a Mutual Fund?

Mutual Funds are subject to stringent regulatory controls. However, as with all equity investments, Mutual Funds do not offer guaranteed returns since the value of their units will fluctuate according to the value of their investments. But by investing in a wide range of different stocks or spreading your investment across different asset classes (e.g. bonds, cash and equities), risks can be significantly diversified.

There are many different types of Mutual Fund available to suit a range of risk profiles, allowing you to choose the style that best suits you.

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Who should I contact if I have other questions?

If you need any further information, please call us Toll Free: 800 124 1212.

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