One important concept which always has been spoken when people talk about the finance and financial details is the concept of mutual fund. Before really moving into the discussion about mutual funds, we will bring the basic definition of other related but important concepts of stocks and bonds…
similarly we can outline the concept of bonds. Bonds gives people chance to lend our money to the government or a company. We receive interest and principle back over pre-determined amount of time. We can say that bonds are the most common lending investments traded on the market. Other than shares and bonds there are other types of investments like real estate and precious metals but it is generally perceived that mutual funds mostly invest in stocks and bonds.
Many definitions have written by people but essentially all dwell upon the same idea regarding its concept. So a mutual fund can be defined as a financial intermediary that allows a certain group of investors to pool their money together with a pre-determined investment objective. Here in mutual fund there exists a fund manager who trades the fund's underlying securities. He then can realize capital gains or loss and then collects the dividend. Whenever we invest in a mutual fund, we are buying shares of the mutual fund and thus in the process becoming a shareholder of the fund. After the dividend income is found, the investment proceeds are then passed to the individual investors. We then calculate the value of the share of the mutual fund which is known as net asset value. ...
ies we can say that it is one of three types of investment companies in the United States and outside United States & Canada mutual fund can termed as generic word for various types of collective investments.
Types of Mutual Funds
There exist few common types of mutual funds and they are outlined as follows: Money Market funds, fixed income funds, equity funds or growth funds, balanced funds, global funds, specialty funds and index funds. Lets describe each of them briefly so as the understand the whole concept clearly.
Monet Market Funds:
These are generally perceived as low risk funds offering low returns. These are a type of mutual funds that invest in a short term debt securities of agencies like banks U.S Treasury bills. They have advantages of being widely used, low risk and highly liquid in nature.
Fixed income funds
It is a type of mutual funds which invest in debt securities like bonds and mortgages. The main goal is to provide the investors with regular income with low risk. Here in this type fund values fluctuate in response to changes in interest rates
Equity funds are also called as growth funds. It invests primarily in common shares. The goal is to have long term growth because the value of the assets held usually increase over time. Some funds focus on blue chip companies and others on smaller companies.
It invests in a balanced portfolio of equities, debt securities with the goal of providing reasonable returns with low to moderate risk
Global and foreign funds
It is a type of mutual fund which may be fixed income or growth or balanced funds and which invest in foreign securities.
It is a type of mutual fund which invests primarily in a specific geographic location or a specific ...
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Furthermore several international mutual fund markets were reviewed for the sole purpose of learning and adopting from the performance surveys of several countries, such as developed markets like those of the US, UK, Hong Kong and Singapore, which are active participants of industry associations of investment professionals in the promotion and evaluation of mutual funds.
Mutual Funds Introduction With the increasing risk of the financial markets brought on by the American recession and the European Sovereign Debt Crisis investors have increasingly looked to safe havens for their money. One of the most prominent and conservative means of investment diversification has been the mutual fund.
If a nation’s exports surpass or are more than their imports, this is good for their economy whereas, if imports exceed exports it is bad for the economy. Debt transactions destabilize the economy while credit transactions stabilize the economy. When the U.S government sends relief payments to developing country is a debt trade transaction.
Money market mutual funds aim at limiting losses incurred because of market, liquidity, and credit risks. They preserve the principal in the investment and bring in modest dividends. Though there is fluctuation in the interest rates, the Net Asset Value of the funds remains at a $1 per share constant.
Rather than benefiting in terms of a specific dividend payment or bond interest, the investors benefit by receiving a proportionate share of the mutual fund's investment return or suffer by absorbing a proportionate share of the mutual fund's investment loss.
tment that will provide him with safety of principle (low-risk), a reasonable monthly income to supplement his government benefits (high-yield), and still have some money left to leave to his nephew when he dies. Accordingly, we will recommend a no-load, low-expense mutual fund
With due respect to the skills of the incoming managers, still the funds which are already in transition suffers from some common problems-Hedge funds and other traders try to guess what positions might be sold. Sometimes investors in a fund jump ship en masse, forcing
anager who makes investments using the fund’s capital in an attempt to produce capital gains and income, and in a manner consistent to the investment objectives stated within the fund’s prospectus.
In exchange for the benefits of mutual funds, investors implicitly accept
Through focusing on respective political scenarios within the member countries within the Middle East, the author reveals the reasons behind political instability that the nations experience. In Iraq, political instability started after a provocation of Prime Minister to the minority Sunnis, a community that enjoyed protection under Saddam Hussein.
2 Pages(500 words)Essay
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