What are mutual funds?

What are mutual funds?

What are mutual funds?

Mutual funds are investment companies that accept funds from many investors who have similar investment objective and use the pooled funds to purchase a diversified portfolio of securities one of which would not be accessible at title pawn Atlanta. For example, bond funds restrict investment to bonds, equity funds invest in stock, and balanced funds invest in both stocks and bonds. In exchange for the investment, the investor is created with a number of shares in the mutual fund. The price of mutual fund shares fluctuates with the performance of the securities owned by the fund. The owner of the mutual fund shares may sell his for her shares of the mutual fund at any time.

Administration of mutual funds

Management companies (such as Dreyfus, Fidelity, and T. Rowe Price) administer mutual funds. These companies have investment advisers who analyze investments and make recommendations, and fund managers who decide when to buy and sell securities. Each mutual fund is designed and managed to meet the investment objective of a specified group of investors. Common investment objectives of mutual funds included current income, capital appreciation, income and appreciation, conversation of principal, and tax avoidance. The Fidelity Magellan Fund, administrated by Fidelity Investments.

Composition of mutual funds

Although sometimes viewed as monoliths, mutual funds are made up to many individual security investments. Portfolio composition refers to the individual securities in the portfolio. Under “Composition,” we learn that as of January 1997, Fidelity Magellan had 5.7 percent of assets in cash, 93.5 percent in stocks, and 0.8 percent in bonds. The stocks in the portfolio, cyclical industrial companies had the highest weighting (23.2 percent), followed by services (16.3 percent) and energy (16.1 percent). Under “Portfolio Analysis,” we learn that Fidelity Magellan held 529 different stocks and 26 fixed-income (bonds, for example) securities. The largest individual security position we are in US Treasury notes (2.90 percent), Caterpillar (2.01 percent), and CSX (1.53 percent). The fund manager, Robert E. Stansky, is free to buy and sell securities at any time. If the fund manager invests in securities that perform well, the portfolio will also perform well. The securities selected do not perform well; the overall performance of the portfolio will also be unfavorable.

Mutual fund share prices: The NAV

One of the most quoted values with regard to mutual funds is the net asset value. The net asset value (NAV) of a mutual fund is the per unit price of the fund – the price at which shares are purchased and redeemed by semi-truck title loans.

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Types of Mutual Funds

Types of Mutual Fund

Types of Mutual Fund

Motorcycle title pawn is one of the many different types of mutual funds or financial instruments that are available. The wide range of funds permits investors to match their investment objectives with the stated objectives of the fund. Next we briefly describe each of the major types of mutual funds. Then we discuss some guidelines for choosing the fund that’s right for you.

Growth Funds

A goal of many investors is growth in the value of their investment. Growth funds are mutual funds that emphasize capital appreciation rather than current income. Growth funds can be divided into two categories: long-term growth funds and aggressive growth funds. Long-term growth funds invest in large, mature companies that are expected to perform well without undue risk to the purchaser. Examples of long-term growth funds include Long leaf Partners, Fidelity Blue Chip Growth, and Harbor Capital Appreciation. Aggressive growth funds seek higher rewards but also accept more risk. Aggressive growth funds invest in new companies that have just “gone public,” small companies that have yet to establish a record of performance, and other, more speculative investments. The AIM Aggressive Growth Fund, Janus Mercury Fund, and Franklin Small Cap Growth Fund are examples of aggressive growth funds.

Income Funds

Income funds are mutual funds that emphasize current income rather than capital appreciation. Some investors, especially retirees who have a fixed-income and face a low marginal tax rate, prefer current income to capital appreciation. Current income from such funds can be used to supplement other sources of retirement income. Some income funds invest in government and corporate bonds. Other income funds invest in stocks with high dividend yields. Income mixed (or balanced) funds invest in government and corporate bonds as well as stocks issues, generating income from both interest payments and dividends. Some mutual funds that emphasize current income include Smith Barney Equity Income, USA Income, and Oppenheimer Equity Income.

Growth and Income Funds

Some investors desire a mix of current income with capital appreciation potential. Growth and income funds combine these objectives by purchasing common stock in companies that have a proven record of dividend payments and also have growth potential. Investors receive a steady stream of dividend income and at the same time are provided long-term capital gains incomes. Examples of funds that combine these objectives include Kent Growth and Income, Mutual Beacon, and Principal Preservation S&P 100 Plus.

Balanced Funds

Another common offering is a balanced fund. Balanced funds are mutual funds that have several objectives. These funds attempt to maintain principal, generate income, and provide long-term growth so as to avoid a motorcycle title pawn.

Invest in Mutual Funds

Mutual Fund Investors

Mutual Fund  Structure

How a car Atlanta pawn can invest in mutual funds?

How Mutual Fund Investors Earn Money?

Mutual fund investors can earn money from their investment in three ways:

-A fund may receive income in the form of dividends and interest on the securities it owns. A fund will pay it shareholders nearly all the income it has earned in the form of dividends.

-The value of the securities a fund owns may increase. When a fund sells a security that has increased in value, the fund realizes a capital gain. At the end of the year, most funds distribute these capital gains (less any capital losses) to investors.

-If a fund does not sell the securities that have increased in value, the price of its shares (it’s NAV) increases. A higher NAV reflects the higher value of each investor’s shares. And investor who sells shares that have increased in value makes a profit (also a capital gain).

Usually mutual funds give investors a choice: The fund will pay you dividends and capital gains and cash, or you can them reinvested in the fund and purchase more shares.

Advantages of investing in mutual funds

Mutual funds provide a number of advantages to investors:

-A major advantage is instant diversification since the assets are invested in many different securities. The risk to purchaser is reduced through this portfolio diversification.

-Initial investments requirements of many mutual funds are low, with some funds accepting less than $1,000. Many funds will also accept small additional investments.

-The ability to make additional purchases of mutual fund shares by reinvesting income (dividends) and capital gains distributions is another advantage. Not only is reinvestment convenient, but mutual fund investor also reducing their risk through dollars-cost averaging. Recall that dollar-cost averaging is a strategy through which smaller investments are made periodically at many different prices. The result is a lower average cost per share than if a single large purchase was made at the “wrong time.”

-Purchase and sale of mutual fund shares is relatively simple and often can be done by mail or through a phone call.

-Individuals with investment expertise manage mutual fund assets.

-Most mutual fund companies offer a “family of funds.” A family of funds is a group of mutual funds with different objectives and asset composition under the management of the same investment company. If your objectives change or if you are not satisfied with the performance of one fund, you can easily switch to another fund like for example a car Atlanta pawn.