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What are mutual funds

Mutual funds bring together money from multiple investors and invest it on their behalf.

So, when you invest in a mutual fund, you’re buying a share in the fund itself and the assets it owns, such as stocks, bonds or a combination of both.

Key features of mutual funds

Mutual funds give you access to multiple assets at once so you can easily diversify your investments. This can save you having to research and choose individual securities.

Some mutual funds are passively managed and aim to match the performance of a specific index, or collection of assets, such as the ADX General Index. Others are actively managed – where a professional fund manager builds a portfolio of stocks, aiming to outperform a benchmark.

There are two main ways you can earn returns through mutual funds:

  • capital gains if the fund's assets rise in price
  • income from dividends on stocks and interest on bonds, which you can choose to either take or reinvest

There are four main categories of fund:

  • stock funds, which invest in equities on the stock market - they may focus on a market index, a particular sector, or theme, such as dividend-paying stocks
  • bond funds, which invest in bonds, and can vary in terms of risk and reward because of the wide variety
  • money market funds invest in securities issued by corporations and governments, and so offer a relatively high quality, lower risk, short-term investment
  • multi-asset funds typically invest in a combination of 2 or more asset classes, offering further diversification. The allocation to various asset classes may change based on the fund manager's view of the market

We may not offer all of the above funds. Please see our funds search.

The pros and cons of mutual funds

As with any investment, there are advantages and disadvantages to mutual funds.


  • You don't have to research and actively manage the assets in a mutual fund, which can be particularly useful when starting investing
  • Mutual funds usually invest in a wide variety of different assets, spreading risk
  • Many mutual funds are actively managed by a professional fund manager with expert investment knowledge


  • Mutual funds usually have a management fee, and possibly other fees, which must be paid regardless of investment performance
  • Spreading of risk across multiple assets can limit potential returns, as profits from some holdings within a fund may be offset by losses from others
  • Professional management is no guarantee of positive returns, so you can still lose money

Are mutual funds right for you?

Like all investments, your personal finances, goals and attitude towards risk should help inform your decision about whether mutual funds are right for you.

If you think funds could be a good option for you, take fees and charges into account when assessing the potential rate of returns. Consider whether it's worth paying extra for an actively managed fund, or whether a lower-cost tracker might achieve your goal.

Seemingly small costs can make a big difference over a longer time frame.

It's also worth thinking about the type of fund you wish to invest in, as some may come with higher risk - and potential reward - than others.

As with all types of investment, you may get back less than you put in. That's why we generally recommend planning to invest over the medium to long term - around 5-10 years. This gives your investment time to recover from any short-term falls. 

It's a good idea to read the Product Factsheet and Key Investor Information Document (KIID) of any fund you're considering investing in. This will help you understand what sector or region it invests in, the general strategy of the fund, and its risk grade.

Before making any kind of investment, it's worth considering your current financial position, and setting aside an emergency fund of 3-6 months' salary to manage any unforeseen expenses without having to withdraw your investments early.

How to invest in mutual funds in UAE

Often the most challenging part of investing in mutual funds is choosing one that's right for you. You'll also want to compare funds to help ensure you're getting good value for money once you've accounted for fees and charges.

We can help you choose from a wide range of funds and assets classes to complement your existing portfolio, switch your investments, and even decide how much or how frequently to invest (conditions apply PDF, 155KB).

If you’re interested in investing in the UAE, our advisors can help you choose which might better suit your personal and financial circumstances, as well as help you to navigate any special considerations, such as investing in ethical funds, for example.

The UAE Securities and Commodities authority (SCA) issued a new regulation that is effective from 01 April 2024. Here is a summary of the key points:

  • Promotion of foreign mutual funds is limited to Private placement for Professional Investors with a minimum ticket size (as guided by SCA)
  • Public Offering is permitted for Retail Investors only with locally domiciled funds

A Professional Investor (PI) is a customer who:

  • Has net assets of at least AED 4 million
  • Appears to have sufficient experience and understanding in the field of investment, the relevant financial markets and any associated risks
  • Has confirmed their PI classification status

A retail investor is a customer who:

  • Does not meet the criteria of a Professional Investor (PI), or
  • Fulfils PI conditions but opts-in to be a Retail client

To find out more about the regulatory changes, please read our mutual funds FAQs (PDF, 155KB).

You can speak to one of our advisors, or seek independent financial advice.

Pre-investment checklist

  • Assess your current final position
  • Work out your goals, timeframe, risk appetite
  • Consider your options, such as asset classes and investment types

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