kindly let me know about mutual funds in details.?

Answer 1

The definition for a Mutual Fund (MF) from Wikipedia:
A mutual fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. In a mutual fund, the fund manager trades the fund's underlying securities, realizing capital gains or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors.

What sets this one apart from all the others? Did it beat the Dow last year? No. If it can't beat the index it tracks, does that make it a "good" fund? No. Just because they made money means nothing, unless it was a down year.

Let’s look at Investment Company of America (ICA), owned and operated by American Funds (AF). AF is an awesome fund company for a couple of reasons. There are several advantages and disadvantages:

1.AF is a private company which means they only answer to their MF holders. Fidelity is a good company also, but they are owned by stock holders. In the long run the company that only answers to you, the MF holder, is going to look out for your best interests.

2.AF also has some of the lowest annual fees to maintain an account of any MF company. All that being said, depending on your situation ICA may or may not be good for you. You need a competent advisor to help you with that.

3.I would be cautious with ICA as it is one of the largest MF in the world. They may seem like a good thing but it actually can be bad. It means it has much less flexibility to move its money around when conditions warrant it.

4.As far as EJ goes, they hire people on average who have very little experience in the industry, so at a minimum make sure your rep has a lot of experience and didn't just start last month at this. They also have agreements with companies like American Funds where their reps get a bigger commission to them then they do with other products. The concern being your advice from EJ might be tainted by the reps desire to get more commission. You need to work with an independent rep to assist you with you decisions; one who will give you all the information and doesn't have a hidden agenda.

Now let's look at MF's, in general, or the decision to use one at all.

If you invest in a MF, you have turned that responsibility over to someone else. To me, they are mostly the same, in general, in terms of results. Fewer than 10% can beat the Dow or other index it follows because of their fees. Why would you pay someone you don't know, whom will almost certainly underperform the market, an annual fee of 2.5% to do something you can do yourself, and do it better by buying an ETF, without any input from you after the initial purchase? An ETF is a publicly traded “Exchange Traded Fund, that trades just like a stock). Just buy the Diamonds (the DJIA ETF) if you want to let it ride on the Dow, or the Spyders (SPY - the S&P 500 ETF), or the Nasdaq (QQQQ), or diversify across the entire market by buying all three. The ETF's trade just like a stock or MF. If you want to diversify, and you want to Buy and Hold, buy an ETF.

A MF is always "in" the market, so you are at the mercy of the ups and downs of the Dow. You are unable to manage your risk with a MF, so you can't put a Protective Stop on a MF, at say 10%, to lock in your profits when the market goes down. You don't have a clue what's going to happen. That is not my idea of investing.

Actually, if done properly, it is more work to investigate all of the MF's and their advisors and their traders and their fees and their methods, than it is to investigate all the similar applicable info about stocks. To me, it's more like a conscious choice to be ignorant, to simply and blindly turn your money over to a stranger because they are "listed," like you do at a bank. Stocks are "listed," as are commodities and ETF's and everything else. With a mutual fund, you've just added a whole new set of unknowns to the equation.

The best you can do in any investment is try to increase your odds of success and reduce your risk. You can do these things yourself, but not in a mutual fund.

MF's are so 20th Century. Relics of the past. Unneccessary. Buy an ETF. Or sell an ETF short and bet on the downside. There are two sides to every market, not just the upside.

Answer 2

mutual fund pool money from many people and go out and buy stock, bonds and other investments. as the investments do better you shares do better and vice versa.

Mutual funds can be bought directly from most mutual fund companies or through brokers. Mutual funds profit by how much money they get from investors and not on how well they do so the incentive to make money isn't really there. But since they dominate the market and pay a lot of advertising dollars almost no one will tell you that about them.

There are many types of mutual funds, closed end, open end, front load, back load, bond, stock, specialty (biotech, mining etc.)
Learning about mutual funds is a project, check out www.fidelity.com for more info.

Answer 3

Mutual funds as an investment vehicle are great for those who have either little or no knowledge of the financial markets (share, debt markets both included) but still want to reap the benefits of value investing.
many types of MFs are available in the Indian markets e.g close ended or open ended, diversified or sector specific, may be equity, debt or balanced, tax (ELSS) etc.
Investing in a particular scheme would depend upon many factors like your risk appetite, your financial objective, time horizon of your investment etc.
Check out tv programme 'fund ka funda' on star news on saturdays or read magazines like 'outlook money' etc for acquiring more knowledge about mutual funds.
Don't forget to visit, website of Association of Mutual Funds of India (AMFI) for acquiring more knowledge on mutual funds in India and website of value research promoted by Shri Dhirendra Kumar, most prominent MF analyst in India.

Answer 4

A primer course in mutual funds is best accomplished with a sit-down discussion with someone in your life that has a good understanding of them, or your banking customer service representative, or internet sights. What you seek far exceeds what someone can do here by way of the written word and in a reasonable period of time.

Answer 5

Hi Raj,

If you are from India, here is the place to get information about Indian mutual funds.