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.