What Is a Mutual Fund?

A mutual fund is one big account full of stocks from many different companies. Or it may be a big account full of bonds from many different companies. Or it could be a big account full of stocks and bonds from many different companies. You get the idea. And they all could be from American companies, or they could be from countries all over the world. Like I said up above, as they have gotten more popular, so have the different types and styles.

The Popularity of Mutual Funds

So why do people like them so much? A few years ago one of my favorite stores was Montgomery Wards. Most of the furniture in my house was bought there. Seen any Montgomery Wards around lately? The camcorder I use to film my grandchildren with was bought at Circuit City. I got a great deal on it; maybe it was too good a deal. Their stores are long gone.

What do Montgomery Wards and Circuit City have to do with why people like these funds so much? Those two companies are just an example of why people do not like the risk of buying stock in a company. You shop at a store and really like that company. So you decide to buy some of their stock and watch it grow. You make the purchase, soon forget about it, and then one day you hear they are closing stores. It is too late by then to sell and hope to breakeven.

While mutual funds certainly have a risk involved with them, it is much less than owning the stock of one company in that fund. The funds are big enough and have spread out their purchases so that one company going under will not sink them. This diversification of the risk is a comfort to most people.

Since these funds come in all shapes and sizes there is different risk involved with different funds. Utility companies have been around for quite some time and more than likely will be around for years to come. The government regulates and watches these companies very closely. Dot com companies of the 1990s were new to the scene and most were not very profitable. The risk involved with a utility mutual fund was a lot less than a fund made up of startup internet companies back in the 1990s. You cannot just jump in with both feet and start buying funds without a little research. A little internet surfing will help you check out different funds and the risk associated with each.

Mutual Fund Account Managers

Another reason people flock to mutual funds is the professional management of the funds. Fund managers have the training, experience and the tools to analyze the market on a daily basis and make adjustments to the fund as needed. They want their fund to do well so it will grow and make them more money. This is just another peace of mind for fund buyers.

Easy to Buy Mutual Funds

Most funds will accept a lump sum investment to get started. And then you can make additional lump contributions or you can set up a weekly or monthly contribution. The ease of getting into and out of these funds also helps make them very popular.

So you can buy in easy, feel good about the diversification of risk and also know that a professional fund manager is watching over your investment. That is why mutual funds are popular and growing.

After years of investing in the stock market I finally realized my portfolio needed some diversification with commodities. Looking into all the possible choices of investing in commodities I decided commodity mutual funds was my best decision. Please check out my website to see if commodity mutual funds are a good fit for you http://commoditymutualfunds.biz

The UNfounded Hype surrounding Mutual Funds is fantastic, millions and millions of Google searches per month indicate how many people consider this a simple way to quickly diversify, hedge and profit. But is it true? Let’s take a look.

It is widely accepted that “Mutual Funds are a simple way to diversify your assets.” -Don’t kid yourself, most of them are sector driven, in other words, instead of owning some stock in a coal company you own shares in a company that owns stock in ten coal companies. This is hardly diversified.

But then, investing in a massive Mutual fund that owns other smaller ones is the answer, right? No. You are still not diversified. Even the massive ones are not usually international, they are confined to one market or Country. If the market tanks or the Country’s currency tanks, you will feel very inadequately diversified.

“Hedging”, is not another way for the fund to turn a profit, It is a form insurance against losses, and costs the fund profits, if it makes any. If you are only looking to protect your money, bury it. But I thought the goal was profits?

Profits, what profits? Even top performing ones do not usually beat the rate of inflation. Do a search on MSN or Yahoo for “top performing Mutual Funds”.. blech!

The strategy is inherently difficult to produce substantial profits:

* The manager must follow the rules of the fund, imagine Warren Buffet Following rules, instead, Berkshire is just his portfolio, he makes his own rules (as a trader should), and follows them strictly.
* Mutual Funds are “Buy and Hold” structured, which is difficult when the economy or market or market sector is imploding and money is constantly deflating.
* Mutual Funds have fees that have nothing to do with performance. This is a huge factor in the small returns on your investment. You are essentially paying their wages and mortgages before profits are calculated, the fund may have seen a profit before it had to pay it’s own expenses. And now, paid, is showing a loss. Performance fees are the answer, but none work on that basis.

In most mutual funds you have no idea of the manager -what his track record is like, not the fund’s track record, HIS track record. Again, Don’t kid yourself, in any fund you are essentially investing in the manager. He is at the helm. But in this case, the cards are stacked heavily against him, that is why it so miraculous that a few of them make it through a crisis. And rightly so, they become famous and influential.

Now “Hedge Funds” are much better suited to the investor, but they are usually exclusive and require very large deposits.

Basically, they are the answer for high net worth individuals. But again, they have a downside too, they are not liquid in that, you are not buying shares in a fund, you actually own a piece of the pie. Many of the investments they specialize in are creative and illiquid. Like long term Real Estate Ventures. 5 years is a short term investment in a Hedge Fund.

I hope I have helped a little in the riddle of where to put your money. -Look elsewhere.

I do not want to give you answer to the question, “Where do I put my money” Just like I do not want to give you many quotes from respected individuals so you will take my word without inspection. I would much rather you did your own research and came up with your own answers.

Start your research at: http://the88plan.com

One of the top Mutual fund for the year 2010 is:

UTI Master Value Fund – Growth Option:

The current NAV as on July, 2010 is Rs 50. The past returns from this scheme are mentioned below.

* 6 months is 9.9 %
* 1 year is 80 %
* 2 years is 30.6%
* 3 years is 16.3 %
* 5 years is 19.2 %

This is an open ended fund with growth Option. This fund has an assets worth Rs 487 crores as on May, 2010. The minimum amount to be invested for this scheme is Rs 5000. There is no entry load for investing in this scheme. There is no exit load for this scheme if you withdraw your investment after 1 year. If you withdraw your investment within a year, then there will be a exit load of 1%. This scheme was launched in the year 1998.

Next Step: Start investing in the best mutual fund:

You have to spot similar best schemes of the year 2010 and invest in that. You can find those details in the related websites.

Click here to get the details of ——>> best mutual funds. You can get the details of the other schemes available in the indian mutual funds.
Kamalkk Kannan

Evidence that these two countries as well as smaller ones like Korea and Singapore are poised to take over the role as global economic leaders can be seen in two ways. The first is the stable growth that has occurred after 2008. While the rest of the world and especially the West is still reeling and possibly descending once again into an even greater recession than 2008, the above mentioned countries are growing slowly, but steadily.

The second component is the number of investment firms channeling money to China, India and the other emerging Asian economies. ARC China, headed by Adam Roseman is a perfect example of an American investment firm now based for the most part in China. ARC China moved over before the great crash and has embedded itself as one of the leading hedge funds in China. Other investors are following suit and as the pendulum swings further it is clear others will as well.

In conclusion, the East is rising and by the look of it is set to lead the world global economy much faster than originally thought. If investors and hedge fund managers want to be on the winning end of global investments they need to go East!

Peter R Schwim is a noted hedge fund analyst and author who writes regularly for http://www.hedgecrunch.com.

There are many top rated mutual fund schemes that are available in Fidelity Investments. Some of them are:

* Fidelity Stock Funds
* Fidelity Europe Fund
* Fidelity Japan Smaller Companies Fund
* Fidelity Municipal Income Fund

There are also some more schemes which are top rated by the rating agencies. As a investor, it is your responsibility to safeguard your money and invest in the right scheme to earn more money. So you should spend some time to analyze the top rated schemes and spotting the best among them.

There is a basic criterion which you should check before investing in any fund. You should check the ratings given by morning star. If the rating is “Low Risk” then you can select the fund and analyze the other factors. You should check the 6 months, one year, 3 years and 5 years returns history and check for consistency. You should also check whether the fund manager of the particular fund has been changed in the past 5 years. This is an important measure because, if the same fund manager stays for 5 years, then he would effectively manage the scheme and generate more returns.

Next Step: Start analyzing the top rated fidelity mutual funds.

Click here to analyze —–>> Fidelity Mutual Funds. After analysis, you can start investing directly in http://www.investmutualfunds.net/.
Balajee Kannan

Why is mutual fund good for you? Basically, fund managers use the pooled amount of money and spread them across many investment types. Overall, this reduces risks. Your money would not fluctuate much if compared to the stock market.

If you prefer to invest in individual securities yourself, by all means, go ahead. But this often requires experience. For beginning investors, this could be a hard task. Therefore, investing in a mutual fund is the way to go. In fact, when you are investing your hard-earned money into mutual funds, you are actually hiring a professional fund manager for a relatively low cost. Comparing the risks factors and experience, it is sometimes hard to compete with them if you invest in individual securities yourself.

What about exchange-traded, hedge funds and managed accounts? You should now be able to know that mutual fund is not the only option you have when it comes to hiring a professional money manager.

Exchange traded funds (‘ETFs’)

They are most similar to mutual funds. The only difference is that they trade on a major stock exchange. ‘ETFs’ can also be bought and sold at the same time during the day of trading. You would find that the good and most value-for-money ‘EFTs’ are the ones that have low fees. They work by investing to track the performance of a specific stock market index.

Hedge funds

Hedge funds are funds that are managed privately. Often times, this option is for richer people with more money to invest. Of course, with greater amount of money involved, risks also become higher. You will see that the fees are much higher (usually 15 to 20 percent) of the return from your hedge fund. Beginner investors should stay away from hedge funds before they have the experience to do so.

Managed accounts

Investing in managed accounts is almost the same as investing in a mutual fund. This is because major brokerage firms employ brokers on commission. Then they offer access to private money managers. As a result, you are getting the same thing in effect; a fund manager. But going the managed accounts is generally not recommended as the high fees reduces its effectiveness when compared to the more “ordinary” mutual fund.

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An offer document is issued by a mutual fund containing proper details of the scheme, it’s investment horizon and class of securities in which it intends to invest. After the issue the collective money is pooled together to constitute a fund. The fund is managed by a fund manager who takes all the major investment decisions. A trust takes care that the mutual fund investments are in accordance with the scheme of the fund and that the fund is being managed in the interest of investors.

Net Asset Value (NAV) per unit refers to the total assets managed by the fund at their value divided by the outstanding units of the fund. The NAV of a scheme depenps on the market value of its investments and hence it will fluctuate with the fluctuating share prices of its investments. An increase in NAV means capital appreciation for it’s investors. Mutual funds (M.F) are managed by professionals who have requisite experience and qualifications in the area of stock markets. Thus for a new entrant in the stock market mutual funds act as a safe vehicle for investments.

M.F invest in a number of scripts and the aim is to construct a diversified portfolio. This means that the impact of risks associated with individual securities is minimized and hence investors can enjoy the benefit of diversification even at a low amount of investment. Since the pooled funds are invested in different sectors and stocks there is a diversification effect reducing the overall risk to the portfolio. M.F generally trade in large number of securities at the same time giving them the advantage of economies of scale resulting in savings in the form of lesser brokerage per unit of purchase, etc.

M.F are categoried according investment objectives. Growth funds invest majority of their pooled amount with the objective of long term capital appreciation. Their major investments are in equity and equity related instruments which gives high return. Income funds provide periodic return in the form of dividend. These funds invest in securities which provide regular return and these returns are distributed to investors in the form of dividends. These funds primarily invest in Gilt securities, bonds and debentures,etc. which are regarded as safe investments. Thus not only do these funds provide regular return but are also less risky. Balanced funds are a midway between growth funds and income funds. They balance their investments in such a way that investors not get periodic return but their capital also tends to appreciate.

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We can classify 5 mains categories of unit trust funds in Malaysia:

1)Equity fund: The major portions of equity fund portfolios are shares of listed companies. It’s available in the market with higher risk-higher return to those with lower risk-lower returns:

·Aggressive growth fund – generally invests in companies with higher capital growth, but with higher risk.
·Index fund- normally the return will closely resemble the performance of the stock market index, both in

terms of risk and return.
·Income fund – the fund will invest primarily in stocks that earn significant dividend income, rather than

companies that are expected to pay little or no dividends.

2)Fixed Income fund: Mainly invest in corporate bonds, government securities and liquid securities. Generally it will provide regular income with less emphasis on capital growth.

3)Property fund: Invest in real property. The fund returns are generated from rental income and capital appreciation. Most property units are listed on stock exchange, as the assets are highly illiquid.

4)Islamic fund: Investment in accordance with Syariah Laws. Main objective is to invest in a portfolio of halal stocks. Non-halal stock – companies produce or involved in activities, products or services and financial services, gambling, alcoholic, beverages and non-halal food products.

5)Balanced fund: invest in between Equity fund and fixed income investments.

By having good understanding of the above funds categories, we start to evaluate the funds to invest in, by considering our investment objectives and risk tolerance level.

Sheng Feng Ang is currently a Unit Trust consultancy, mainly in investment and financial training. Adelaide has obtained the ” Certified Financial Planner”, is globally recognized in USA, Canada, Japan, Australia, Hong Kong, China, Taiwan, Indonesia, India, Singapore, United Kingdom, New Zealand, Germany, France, South Korea, Brazil, Austria, South Africa and Switzerland.

Unit trust investment is one of the many ways to increase our retirement fund and maximize our gain and minimize our risk along the period of investment horizon towards our retirement age. For more information about unit trust investment, please contact me at: sf_ang2003@yahoo.com or sfang2003@gmail.com

This was especially intriguing to the individual who has thus far failed to benefit from this excellent form of cheap insurance. What you must watch out for, however, is this: Not all “group insurance” is alike. Always insist on a sample policy. Read it and see what you’re getting. Always become educated on any investment.

Never let the dollar value of your insurance gain oversell you on a mutual fund that may not be going anywhere. Make sure you’re buying into a good long-term investment. Some funds may not be any safer than individual stocks. What’s more, your input may not be readily available to you in emergency for some time to come, inasmuch as most of the mutual-fund “plans” take the salesman’s commission out of your payments in the beginning – like a life insurance agent’s commission.

As in all “plans” and “packages” it’s up to you, the buyer, to total up the worth of the individual components and decide whether you want to buy in that fashion. This is not to imply that mutual funds are not a good buy. I like mutual funds but not in an insurance policy and have a good basic rule. If a mutual fund is not old enough to be potty trained I do not waste my time looking at it. I look for mutual funds with a 10-15 years performance at a minimum.

Some have very fine potential. But they are by no means all alike. If you are going to put several thousand dollars into one over a period of time, give that big investment your utmost attention add care. Don’t be misled by the insignificance of the “down payment.”

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What are the reasons for this? It theory it is they who should be more keen to take advantage of the scheme as they could do with more government assistance. The Tories claim that many are unaware of the existence of the scheme, therefore suggesting that the government has done a poor job of publicizing it and educating people to its benefits.

It is possible, though, that it purely comes down to the fact that wealthier people tend to have more money available to them to invest. For the Child Trust Fund to be really beneficial it is necessary to invest further, with family and friends allowed to invest up to £1,200 per year. The original £250 voucher from the government shortly after a child is born, plus a further £250 voucher seven years later will not have a huge impact once a child turns eighteen. Therefore it is possible that many parents who cannot afford to further invest, don’t think it has any value, although it could be argued that £500 plus interest is better than nothing.

Many are in the situation of simply being unable to further invest. Feeding and clothing children now is more important than saving for their futures; many have no choice but to think about the present. By the time today’s children turn eighteen they may be earning themselves so providing for them now is more important. In a way not taking advantage of the child trust fund could be a missed opportunity. It is possible that taking full advantages could mean an eighteen year old could receive £24,000. But in reality the majority of parents are unable to invest anywhere near the £1,200 each year.

There is much debate as to the future of the child trust fund. The Conservatives have said that they will make the child trust fund only available to the poorest third of families, as they are the ones who need the help most. But considering the statistics that they have highlighted, would this be a positive solution? Although almost 70% of the poorest families do open a CTF account, many of these will not be regularly investing, therefore making the scheme relatively ineffective. It is the wealthier families who take full advantage, so it is likely better to either leave the scheme as it is or withdraw it altogether.

Andrew Marshall ©

Child Trust Fund