details about mutual funds?

Answer 1

Besides the other excellent answers that you received, here is some additional information:

There are two types of mutual funds, open ended and closed ended. Open ended mutual funds are purchased from the mutual fund company at net asset value minus possibly a front end load if it is a fund that has a front end load (sales charge).


Closed end funds are traded like stocks. They may sell at more than the net asset value or less than the net asset value, sometimes much less.

Recently a sub class of both types of funds has come to market called index funds. These are essentually unmanaged funds that are set to track a market average such as the S&P 500. They have become very popular because their expense ratio is much less than a managed mutual fund and because most (70%) of mutual funds underperform the market in general and also are not tax efficient (you have to pay taxes each year on realized capital gains). An index fund has very little realized capital gains because the stocks in the portfolio are seldom traded.

There are many many of all types to choose from and one must be very selective. Yahoo finance is a good place to research open ended mutual funds. The link below is a good place to research closed end mutual funds.

Answer 2

A mutual fund is an investment that pools the money of many investors together to purchase stocks, bonds, or cash equivalent investments. Every mutual fund has a stated objective such as growth, income, or capital preservation. The mutual fund is managed by a professional money manager who does all the research and decides what investment goes into the mutual fund. He/she must stay within the guidlines of the stated goals of the fund. For example, if the stated goal of the fund is to generate growth, the main asset that will be in the fund will be individual stocks with growth potential. If the stated goal of the fund is to generate income, the main assets in the fund are going to either be bonds (because of the income that they generate) or income producing stocks.

Mutual funds are great for the small investor because one small investment buys you the diversification of owning hundreds of companies. Each mutual fund is comprised of hundreds of companies that the professional money manager believes are some of the most solid and best run companies available. Even if he is wrong on a few of them, the fact that the fund is comprised of hundreds of other companies spreads your risk out dramatically. If you were to buy individual stocks on your own, you would have to have at least $100,000 to get yourself properly diversified. Even with that you would only be able to afford about 10 or 15 stocks. The risk that you would be exposed to would be dramatically higher than if you were to go the route of a mutual fund.

Answer 3

Mutual funds in general are pools of invested money that a Portfolio Manager for the fund invests in a number of different publically traded companies. Some Mutual Funds invest in specific areas (Biotech, Tech, Construction). They are generally considered Low Risk, with a limited return over a number of years. Not a get rich quick option.

Contrast against a Hedge Fund

Answer 4

Gemelli2
Level 2

I suggest that you check out

"investopedia.com" , "investorwords.com"

mutual funds are a basket of stocks, so each "share" of a mutual fund represents holdings in -depending on the fund- anywhere from a few dozen to hundreds of companies.
There is normally a minimum amount to open a mutual fund
$3000-$5000 is pretty standard...
some have "loads"...up front sales charges of 3% to 6% [YIKES!!]
in addition, they have operating charges....these vary with the fund and the type of fund shares...see any prospectus

the easiest way to buy them
....brokerage houses and directly from the fund company

selling them, the same way....

although-and this is a fine point-your NAV for some funds is not determined until the close of that day's trading....not necessarily the time that you put the sell order in.


Mutual funds allow you to diversify your holdings....you can buy funds that target a specific type of company , size of company, location of [global] company...etc etc etc

However....ETFs and closed-end funds usually have cheaper operating expenses and do not have a minimum dollar amount to purchase...and there is an ETF and/closed-end fund that will match any mutual fund available...

for these, I suggest you refer to
Amex.com. CEFA.com ishares.com powershares.com


before you put a dime into anything.....read enough to have a really good idea of what you are buying.....

and don't be afraid to use stops/limits/stop limits to limit your losses and protect your gains

good hunting

Answer 5

Library - Arthur Weisenberger

www.morningstar.net

Answer 6

go for amfi.com