How can I learn more about investing?
The AMF has published a series of brochures on how the securities market operates. The following documents are available for consultation:
- Update your financial position
- Choose the investments that suit you
- Short Investment Glossary
- Mutual Funds (pdf - 629 KB)This link will open in a new window
- Watch out for securities fraud
- Prospectuses made clear (pdf - 536 KB)This link will open in a new window
You can also obtain them by contacting the AMF's Information Centre:
Québec City: 418-525-0311
How can you avoid being a victim of fraud?
Check whether your broker, advisor or representative is registered with the AMF. Remember that promises of high returns with low risk are usually too good to be true. Make sure you fully understand the investments proposed to you. It has taken you time to save. Know how to choose investments that suit you. If you are dealing with someone who is putting pressure on you, drop it.
What type of investment suits me best?
Is the Internet a reliable source of information?
Do not believe everything written on the Internet. Remember that it's easy to hide your identity on the Internet. Scams usually involve projects in remote areas of the world on which it is difficult to find information, or the technical jargon used can only be understood by experts. Do not rely on so-called “privileged” information. The hot tips published online are rarely true, if ever! For more information, refer to our Watch out for securities fraud brochure.
Does the AMF provide advice on the purchase or use of specific financial products or services?
What is a mutual fund?
A mutual fund is made up of money that is pooled by investors and managed on their behalf by a portfolio manager who uses the money to purchase securities such as shares and bonds based on its objectives.
In consideration of the money you place into the mutual fund, you receive units or shares that represent your share of the mutual fund's assets. Ownership is in the form of shares if the mutual fund is set up as a business corporation, in which case it is referred to as an open ended investment company. Ownership is in the form of units if the mutual fund is set up as a trust.
In general, mutual funds offer units continually, which means that new investors can purchase them. Generally, existing investors can ask for their units to be redeemed at any time, and obtain the proceeds quickly. When you ask for your units to be redeemed, the amount you receive is based on their value, less any redemption fee, if applicable.
For more information, refer to our Mutual Funds (pdf - 629 KB)This link will open in a new window brochure.
How is the mutual fund industry regulated?
In Canada, the securities industry is governed by provincial and territorial securities laws. This is the case for mutual funds.
In Québec, the AMF regulates this matter.
Securities laws regulate the mutual fund industry in three ways:
- By requiring registration;
- By requiring a prospectus;
- By applying rules and policies concerning the operation of a mutual fund and its sales practices.
For more information on these items, consult the Mutual Funds (pdf - 629 KB)This link will open in a new window brochure.
I have purchased shares in a mutual fund. Can I change my mind once I have subscribed for mutual fund units?
Anyone who subscribes for mutual fund units may cancel the contract unilaterally and receive full reimbursement by sending a notice to such effect to the dealer or firm within two business days of receiving the Fund Facts.
How is the unit value of a mutual fund calculated?
A mutual fund first adds up the value of all the securities and assets it holds. Fees are deducted from this amount to determine the net asset value. By dividing the net asset value by the number of units outstanding, the net asset value per unit is obtained. An investor can find out the value of his investment by multiplying the net asset value per unit by the number of units owned. The net asset value per unit is calculated at the end of every business day, generally at 4:00 p.m. For more information on mutual funds, refer to our Mutual Funds (pdf - 629 KB)This link will open in a new window brochure.
What are the main categories of mutual funds?
As a general rule, mutual funds are classified based on their investment objectives and the assets they hold. Some of them target low-risk investments, whereas others hold more risky securities. If you decide to invest in mutual funds, it is important to identify those with investment objectives that are suitable for you. You should also take into account the risks, fees and other features. For more information on investment objectives, please refer to the Choose the investments that suit you brochure.
How can I earn (or lose) money by investing in a mutual fund?
You may earn a return from:
your share in interest income, dividends or capital gains generated by the securities held by the mutual fund;
any increase in the value of the units caused by the rise in the value of securities
held in the mutual fund portfolio.
On the other hand, the value of the units held could be lower if the value of the securities held by the mutual fund declines.
For example, if you invest in a fixed income mutual fund, you can expect a significant portion of the return on your investment to be based on accrued interest or dividends. This income will either be paid to you directly or reinvested in other units of the mutual fund in your name. You can also expect a certain fluctuation, either up or down, of the value of your units based on movement in the bond market. The value of fixed income securities moves in the opposite direction of interest rates. If the current interest rate increases, the value of your fixed income mutual fund portfolio could fall.
If you invest in an equity mutual fund, your return will more closely be tied to the performance of the stock markets. Thus, you could obtain a return on distributions of dividends or capital gains generated by the securities held by the mutual fund. Your profits or losses could also result to a great extent from fluctuations in the value of the mutual fund portfolio. If the price of the shares held by the mutual fund rises, so will the value of your units. On the other hand, if the price of the shares drops, the value of your units will also drop.
For some mutual funds, the return will depend to a certain extent on the manager's skill in selecting securities.
For more information on mutual funds, refer to our Mutual Funds (pdf - 629 KB)This link will open in a new window brochure.