Transitions in the financial markets are well-documented. There are firms that have extended their portfolios from a single financial instrument to multiple forms of securities. One of the most common shifts that investors make is to venture into stocks. Several companies have discovered the potentials of stock trading and the possibilities of further expanding their portfolios. This strategy has provided unlimited gains for companies. In addition, financial intermediaries have increased the assurance given to their investors that the latter’s investment will gain more than expectations.
Among financial firms, mutual fund operators are viewed as likely to venture into stocks. Exclusive mutual fund investors have stretched their portfolios to cover the stock. This change is strategic as the range of available investment instruments have increased. In the mutual fund industry, Fidelity Investments is one of the firms that risked on stocks. The company is operating as a brokerage firm aside from mutual funds. This has allowed Fidelity to provide more opportunities for their investors.
Moreover, the growth of the stock market in the United States and abroad creates possibilities for Fidelity Investments. The shift from exclusive mutual funds to stocks has risk and rewards. The rewards are evident as Fidelity is expecting investors to increase and portfolios to expand. The possibility of expanding its operations to growing markets in the world is high. Its venture in the stock market, however, has some risks to consider. Stocks markets have been unpredictable and are greatly influenced by market forces and economic activities.
From Mutual Funds to Stocks There are several reasons that drove Fidelity Investments to take the risk and explore the stock market. The most evident justification for the move is the growing number of investor willing to deal with stocks. The influx of investors in the stock market is a valuable opportunity for Fidelity. Although stocks are highly risky, investors are more into stocks because the buying and selling of such securities is manageable. Acting as a stock broker will allow Fidelity to determine the value of its investments.
In addition, it will make Fidelity available to the growing number of stock investors. On the average, stocks provide higher rewards than mutual funds. The financial returns of stocks can surpass the returns from bonds. Aside from the high gains, stocks are preferred because these securities are highly liquid. Some mutual funds take years to mature. The short-term funds can be transformed to cash in a short period of time with limited returns. Most investors are inclined to venture into invest on securities with high gains.
The length of time in which the gains from mutual funds are realized can cause concerns because market changes can affect the value. The potentials in the U. S. stock market are an important influence to Fidelity Investments’ decision to make a shift. Although the U. S. economy is declining, the stock market remains upbeat. Prices of stocks have increased and the values of these securities are expected to rise. There has to be a way to take advantage of these developments. Instead of relying on mutual funds, Fidelity Investments need to cover stocks.