How to Invest in Mutual Funds?

You have some money to invest, and you're looking for some options. Generally, there are two ways to approach this: identify the stocks, bonds, and similar assets that align with your investment strategy, then invest in them individually and manage them yourself. To do so requires expertise, time, and effort. Many such investments also require larger initial investments.

Or you can invest in mutual funds, a pool or 'basket' of funds collected from many investors to invest in a portfolio of stocks, bonds, and securities. As the investments are spread across diversified securities, the risk is comparatively lower than investing in individual securities (even if one security underperforms). A dedicated Fund Manager will invest according to the fund's strategy and manage, monitor, and optimize fund performance for the best possible returns.

However, since mutual funds are professionally managed, investors should note that they typically require management fees to be paid to the Fund Manager. While management fees may vary across mutual funds, they usually range from 0.5% to 2% per annum of the total assets managed by the fund. There could also be performance or transaction-based charges. According to Citibank UAE’s latest Schedule of Fees, subscription or switch fees through the digital platform are typically 0.99% per transaction, while branch‑channel fees may be as high as 5%. Custody fees are around 0.2% per annum (charged quarterly on the average balance), and early redemption charges can go up to 2%, depending on the specific fund’s terms.

If you are looking to diversify your portfolio and prefer to have your investments professionally managed, mutual funds may be a suitable option.

How to Begin Investing in Mutual Funds?

There are many types of mutual funds available on the market. On a basic level, some funds invest in stocks (equity funds), in bonds (fixed-income funds), and in stocks and bonds (balanced funds). There are also funds with risk-free rates (money market funds) or that invest specifically in a country, index, sector, or commodity.

With so many mutual funds available, picking the most suitable option can be overwhelming. The best way to begin is to consider your investment strategy, risk appetite, and personal preferences, then shortlist a few mutual funds aligned with those considerations. You may also wish to consider factors like fund diversity, past performance, and the credentials of the fund manager. To ensure the potential profitability of your investment, don't forget to factor in costs like management fees, inflation, and tax consequences. Keep in mind that even though mutual funds are professionally managed and have a comparatively lower risk than investing in individual securities, returns are still largely subject to market risk conditions. Reviewing each fund’s “Key Facts Statement” can also give clear insight into its fees, strategy, ratings, and performance. Citibank UAE, for example, publishes updated KFS documents—some as recent as July 2025—to help investors make informed decisions.

You may also wish to refer to the 'fund prospectus' of your shortlisted mutual funds, which contains helpful information like ratings, fees, strategy, and performance. There are also tools available online to compare funds, which can aid decision-making.

Mutual funds are easy to buy, sell, and redeem - you may do so through the mutual fund or a financial brokerage like Citibank.

Citibank UAE, for instance, offers easy access to some of the world's largest and most trusted funds from companies such as Alliance Bernstein, Blackrock, Fidelity, Goldman Sachs, Invesco, MFS, Schroder's, Franklin Templeton, and Pioneer. Citibank's relationship professionals will also assist in assessing your investor profile, knowledge, and experience to select the right mutual fund for you.

Exclusive Solutions for Citigold Private Clients

For high-net-worth individuals in the UAE, Citigold Private Client offers access to a handpicked range of global mutual funds. Clients get personalized investment plans from a dedicated relationship manager, with support from an expert advisory team. This helps ensure each investment matches the client’s goals, comfort with risk, and long-term plans.

Make it mutually rewarding. Apply for an Investment Account by visiting your nearest Citibank branch or by applying online.

Final Thoughts

Investing in a mutual fund offers an accessible way to diversify a portfolio and benefit from professional management. Understanding how to invest in mutual funds begins with assessing financial goals, risk appetite, and fund performance. Reviewing updated Key Facts Statements and factoring in fees can help ensure the chosen fund aligns with expectations. With options ranging from equity to balanced and money market funds, investors can select strategies that suit their needs. Partnering with trusted providers like Citibank UAE can make the process simpler and more rewarding.