The returns on the investments are divided among the investors according to the percentage of the value of the fund that they own. The returns could either be positive or negative, meaning that the pool could either realize profits or losses depending on a number of factors. The most predominant factor is normally the prevailing market conditions. The returns are realized when the pool sells shares to the general public.
Mutual funds fall into different categories and they all attract different rates of returns according to the risk factor carried by each one of them. It is normally upon an investor to decide which one to go for after carefully scrutinizing all the factors at play. An investor is also normally free to sell of his shares at ant time he may feel like, but this will mean that he should be ready to sell them at the prevailing stock prices, which may at times be less than the value he bought them for.
Mutual funds bring with them certain advantages and disadvantages, all of which play their roles to make these investments unique in their own way. For example, the risk involved is relatively lower than that of other types of investments and so are the returns. However, when one gets to the specific categories, this may change and you will find that there are those with high risk factors and high returns as well, or low risk and high returns.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUND DEFINITION. If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Posts
