Investments: Characteristics Of
Mutual Funds
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A Mutual Fund combines money from different investors to purchase stocks, bonds and other investments.
- Mutual funds vary by objectives.
- A fund manager invests the pooled funds according to the objectives.
- Profit or loss is distributed among the individual investors.
- The value of shares in a mutual fund is known as "net asset value." Net asset value is the value of the fund divided by the number of outstanding shares.
When considering mutual funds
- Only look at funds that fit within your investment strategy. There are all kinds of mutual funds, including funds that invest in specific industries, or municipal bonds, or specific indexes such as the Dow Jones Index.
- There are funds which do not charge a commission, and those which charge below average management fees. If everything else is equal, no-load funds (funds which don't charge a commission), and which take a lower fee, can more easily provide higher yields.
- Find out if you will subjected to a tax for profits made by the fund prior to your investment.
- There are some funds that waive certain fees purchase and/or redemption fees if you are "disabled." Look at the paperwork for each fund to find out how it defines "disabled."
For more on mutual funds, consider starting your search for information with consumer publications such as Consumer Reports (www.consumerreports.org ). Also check comprehensive sites such as:
There are web sites that help compare the performance of various mutual funds. For example:
- Wall Street Journal has Market Watch, see: www.MarketWatch.com/tools/mutualfunds/fundFinder.asp
- Morningstar at www.Morningstar.com
- American Association of Individual Investors at www.aaii.com/mfunds/
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