Archive for the 'Mutual Funds' Category

Top Mutual Fund Questions for 2008

Published
by
Bill Dick
on May 17, 2008
in Mutual Funds
. 0 Comments
by M. L. Williams

There are many frequent questions that are common about mutual funds. This is probably because mutual funds are so popular these days that many people are already investing in funds or are at least thinking about it. Below are some questions and answers:

Top Mutual Fund Questions Of 2008 - What Is The History Of Mutual Funds?

The very first mutual fund was formed in the Netherlands in the early 1800s. Back then, a mutual fund was known as an investment trust. The first mutual fund formed in the U.S. was the New York Stock Trust in 1889. Because at that time Boston was considered by many to be the financial center of our nation until the turn of the century, a majority of funds started there: Fidelity, Pioneer, and Putnum Fund, to name a few. In 1928 the Wellington Fund was established and was made up of both stocks and bonds.

How Do IRAs Relate to Mutual Funds?

Many retirement accounts use mutual funds as their primary investment vehicle. IRAs were authorized in the United States in 1975 - IRA stands for Individual retirement Account. IRAs have led to explosive growth in mutual fund investing.

What is a No Load Mutual Fund

A “load” is a sales fee charged when you buy or sell a mutual fund - the fee is charged by the mutual fund company. A no load fund is one that does not carry such a sales fee.

What Exactly is a Mutual Fund?

Mutual Funds are pooled investment trusts - the fund buys shares of stocks and you as the individual investor buy shares of the fund instead of the individual stocks.

Top Mutual Fund Questions Of 2008 - What Is An Index Fund?

This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor’s 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks.

What Is Net Asset Value?

Net Asset Value (NAV) is the value of a share in a mutual fund and is calculated by dividing the total value of the fund, less the fund’s liabilities, by the number of shares currently issued and outstanding. For most of the funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day.

Public Offering Price - What is It?

A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by different classes.

About the Author:
Discover more about personal finance, wealth building, internet stock trading and earning income through investing at stock trading, a site with an abundance of knowledge about stock trading and wealth building.

If you're new here, you may want to subscribe to my RSS feed. Thanks for visiting!

Mutual Funds - Index Funds for High Returns and Low Fees

Published
by
Bill Dick
on May 16, 2008
in Mutual Funds
. 0 Comments
by M. L. Williams

Billions and billions of dollars have found their way into mutual funds since they first became popular in the early 1970s, which makes them now one of the best-loved investment options.

A Popular Category of Mutual Fund - Index Funds

There are several different kinds of mutual funds, but a good one to consider is index funds. Index funds are a very common investment because of their usefulness.

Index funds

Index mutual funds are mutual funds that invest in a cross section of stocks and securities chosen in such a way as to attempt to match one of the popular stock indexes’ returns. There are mutual funds that attempt to match the Standard and Poors 500, for example, as well as other funds that try to match the return (up and down) of the Dow Jones Industrial Average, just to give a couple examples of index funds.

The advantages of index funds advantages

Two of the many advantages of index funds are featured below. For example, index funds typically have low management fees because they don’t require much work for a manager, so you end up paying less.

The term “active management” means that a person who is in charge of buying and selling stock for a fund is actively involved. A fund is frequently bought and sold under the direction of the manager, which generates costs to go with such transactions.

And, active management requires that a fund manager be hired who is an expert in stock picking and trading. Such a manager, of course, requires a salary commensurate with the manager’s ability. Index funds, by contrast, require no active management. The stocks are chosen, often by a computer program, to match the return of the index with the least possible trading and virtually no discretion necessary on the part of the fund’s management.

The second good reason for selecting index funds is similar to the first. Choosing an index fund means your returns will track a market index, which means that your fund will be generating a higher return than the over 50% of funds that do worse than those indexes.

You can enjoy the benefit of lower fees to be paid to the mutual fund investment company and your investment performing along with the market index it tracks. If you are in the market for a new way to invest, consider index mutual funds.

About the Author:
Discover about indexed mutual funds and other investment and personal money matters issues at Mutual Fund Trader, a top website covering the mutual fund industry.