View the video “Introduction to Financial Securities: How Mutual Funds Work .” A
ID: 2721171 • Letter: V
Question
View the video “Introduction to Financial Securities: How Mutual Funds Work .” According to the speaker, are no-load funds free? Should you buy mutual funds near the end of a year? Also check out the tools and information available at Yahoo! Finance at http://finance.yahoo.com/funds, regarding mutal funds. According to both this source and the video, what are the two key benefits of mutual funds? How are mutual funds classified (what is a category)? How can you gauge the performance of a mutual fund? What are the costs of owning mutual funds? Where can you get information about a mutual fund? What does a fund screener allow you to do?.
Explanation / Answer
A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. It is commonly applied to open end investment companiesc which are collective investment vehicles that are regulated and sold to the general public on a daily basis. Mutual funds are generally classified by their principal investments. The four main categories of funds are money market funds, bond or fixed income funds, stock or equity funds, and hybrid funds. Funds may also be categorized as index ( or passively managed funds) and actively managed funds.
Mutual funds have advantages over investing directly in individual securities.
1. As mutual funds hold many securities thus this diversification decreases risk .
2. Mutual funds are professionally managed as the portfolio managers supervise the fund's investments.
3. Mutual funds are regulated by SEC .
4. All mutual funds are required to report the same information to investors which makes them easy to compare.
To invest in mutual fund investors pay the fund's expenses . These expenses fall into five categories: Distribution charges , managment fees , securities transaction fees , shareholder transaction fees , and fund service charges .
To track the performance of mutual funds mutualfundindia.com is a complete guide which provides detailed information on performance of various schemes including latest NAV 's , fund comparisons , updates on factsheet, portfolo, dividend, exit load, etc.
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