In the first part of this report we looked at how you pick the best quality managed funds. In this part we are going to look at how you choose the best performing managed funds from your selection of quality funds.
Many of the research houses have useful analysis tools and a particularly good one to use is the Peer Group Ranking Report available with Morningstar. What this tool will do is rank all of your selected funds into a respective category. Let's say you are looking for a geared Australian share fund as part of your portfolio. Morningstar will find every available fund that specialises in Australian shares and uses gearing in their investment strategy. Likewise, you may want to find a fund that invests into the largest international companies. Whatever type of fund you are looking for, Morningstar will have a category for it.
Within each category, the Peer Group Ranking Report will show the performance figures of each fund over 3 months, 6 months, 1 year, 2 years, 3 years, 5 years and 10 years. When looking at performance the best time frame to look for is 3 years. Many purists will tell you that past performance is no guarantee of future performance and this is true if you were looking at one fund in isolation or choosing a fund based purely on performance without looking at the quality of the fund manager.
Viewing performance over a 3 year time frame allows you to see how consistent the fund has been performing. Shorter time periods like 3 months or even 1 year are not long enough and performances could be adversely affected by volatility in the markets. Likewise, you do not want to base your selection on the longer time frames like 10 years. The quality of the fund may have changed over that time and it is likely the fund has different individual investment analysts and managers.
Looking at a specific category like large valuation international funds, you will find that Morningstar has approximately 60 funds in this category with a 3 year performance history. The Peer Group Ranking Report then shows the performance of each of these funds ranked overall and in quartiles. For example, if the peer group consists of 60 funds, then the 15 best performing funds over 3 years would be ranked in the 1st quartile. The 15 worst performing funds would be ranked in the 4th quartile.
If you looked at a Morningstar report for September 2009 you would see that the Platinum International Fund had a 5 star ranking and was ranked 1 out of 58 funds placing it in the first quartile over the 3 year period.
So, the 2nd step in the process involves selecting only those funds performing in the 1st or 2nd quartile over 3 years. I always include the 2nd quartile, particularly if you have a small peer group like geared Australian share funds, as there may not be any 4 or 5 star funds in the 1st quartile. Never pick a fund in the 3rd or 4th quartile and if a fund does not have a 3 year history then move on and find another fund. What you are looking for is proven performance history and you will only get that with at least 3 years trading. Many research houses will give a high ranking to a fund based on the quality of the fund manager even if it has only been trading for a year and has no comparative peer group performance.
So, let's recap on the formula to pick the best managed funds.
* 1st Step: Pick only those funds ranked 4 or 5 stars
* 2nd Step: Pick only those funds ranked in the 1st or 2nd quartile.
This formula will give you the knowledge that you not only have the best quality managed funds in your portfolio, but also the best performing managed funds. It also gives you an excellent basis for conducting an annual review of your portfolio. If the fund falls below 4 stars or the 2nd quartile, then look to replace it.
If you have any questions about the system or the Peer Group Ranking Report feel free to contact me or leave a comment on my website.
Rob Bourne has been involved in the financial services industry for over 35 years. As a practising financial adviser he focuses on the need for practical and down to earth financial education. The aim is to educate people through financial education so they can take control of their own financial future. Visit Rob's website here for more information on business opportunities and investing.
Article Source: http://EzineArticles.com/?expert=Rob_Bourne
The Best Mutual Fund Investment Strategy
The best mutual fund investment strategy for most people reduces risk and gives the investor plenty of flexibility. Here's how to set yourself up to invest money so you don't need to worry when the investment environment turns ugly.
We'll use Jack as our example. He's afraid of losing money, but at the same time wants to earn higher returns than he can get from his bank. A moderate risk, at most, he will accept. Jack is also frugal, and hates to pay fees to invest money. He has a savings account at the bank he adds to regularly.
His best investment strategy, according to his brother Jim whom he trusts, involves opening a mutual fund account with a major no-load fund company. This is where you get the best mutual fund investment bang for your buck, according to Jim, because the cost of investing is low. Plus, with a mutual fund investment you get professional management as part of the package.
The best mutual fund investment strategy for most people reduces risk and gives the investor plenty of flexibility. Here's how to set yourself up to invest money so you don't need to worry when the investment environment turns ugly.
We'll use Jack as our example. He's afraid of losing money, but at the same time wants to earn higher returns than he can get from his bank. A moderate risk, at most, he will accept. Jack is also frugal, and hates to pay fees to invest money. He has a savings account at the bank he adds to regularly.
His best investment strategy, according to his brother Jim whom he trusts, involves opening a mutual fund account with a major no-load fund company. This is where you get the best mutual fund investment bang for your buck, according to Jim, because the cost of investing is low. Plus, with a mutual fund investment you get professional management as part of the package.
We'll use Jack as our example. He's afraid of losing money, but at the same time wants to earn higher returns than he can get from his bank. A moderate risk, at most, he will accept. Jack is also frugal, and hates to pay fees to invest money. He has a savings account at the bank he adds to regularly.
His best investment strategy, according to his brother Jim whom he trusts, involves opening a mutual fund account with a major no-load fund company. This is where you get the best mutual fund investment bang for your buck, according to Jim, because the cost of investing is low. Plus, with a mutual fund investment you get professional management as part of the package.
The best mutual fund investment strategy for most people reduces risk and gives the investor plenty of flexibility. Here's how to set yourself up to invest money so you don't need to worry when the investment environment turns ugly.
We'll use Jack as our example. He's afraid of losing money, but at the same time wants to earn higher returns than he can get from his bank. A moderate risk, at most, he will accept. Jack is also frugal, and hates to pay fees to invest money. He has a savings account at the bank he adds to regularly.
His best investment strategy, according to his brother Jim whom he trusts, involves opening a mutual fund account with a major no-load fund company. This is where you get the best mutual fund investment bang for your buck, according to Jim, because the cost of investing is low. Plus, with a mutual fund investment you get professional management as part of the package.
Mutual Fund Ratings - Can They Be Trusted?
The ratings of mutual funds are placed on them by the history of the previous performances. By researching the companies that you wish to invest in and charting the mutual funds ratings you can certainly see trends develop in the potentials for both profits and losses in these funds.
Funds are usually chosen by those that want to cut down on the risk. The diversity of mutual funds allows for investing in more than one source. A mix of bonds, money market securities or stocks make up a fund in order to cut the risk of putting everything in one place. They are rated in order to help the investor chose which funds are right for them. Each company has its own standards for determining a fund's rating.
Most fund ratings are determined by the past performance of the company making the mutual funds available. The mutual funds performance is commonly tracked for a period of five to ten years in order to have a developed pattern emerge as to the performance. Being as the past is sometimes an indication of what the future holds it stands to reason that it should indicate future performance. This is not entirely the case as it is known that unless you can see into the future you will not know what the future holds with certainty.
For instance Morningstar gives one to five stars as ratings. The score the company first gets on the risk of the fund is what the system is based on. The performance of the fund for the previous five years is then taken away from the original rating. The reliability of this system is not very good as the performance is based on past numbers and can not accurately predict the future earnings or losses on these funds.
Lipper Inc ranks its funds based on prior performance. The worse the performance the higher the rating to indicate a larger risk, the lower the rating the better the performance has been. The total return, preservation, consistency of the return, its tax efficiency and the expense are all factored in to determine the fund's actual risks. This method should be more accurate in determining the actual risk and profit factor involved in the mutual fund.
These are just two of several companies that provide ratings on these funds. Research them and take the time to evaluate the past performance before going with one of these companies for investment advice.
When you rely on fund ratings to provide the needed investment information you should be sure to look at more than one ratings system. You want to follow the ratings company that has the most successful record of predicting the future potential of mutual funds.
Mutual fund ratings while they can be accurate at times are not something to base your future investments on alone. If you rely on these alone you may as be blind folded to pick your investments.
Invest your time wisely and visit MutualFundPlanning.com for more tips on how do mutual funds work and mutual fund suitability compliance and improve your portfolio today.
Article Source: http://EzineArticles.com/?expert=Christopher_W_Smith
Funds are usually chosen by those that want to cut down on the risk. The diversity of mutual funds allows for investing in more than one source. A mix of bonds, money market securities or stocks make up a fund in order to cut the risk of putting everything in one place. They are rated in order to help the investor chose which funds are right for them. Each company has its own standards for determining a fund's rating.
Most fund ratings are determined by the past performance of the company making the mutual funds available. The mutual funds performance is commonly tracked for a period of five to ten years in order to have a developed pattern emerge as to the performance. Being as the past is sometimes an indication of what the future holds it stands to reason that it should indicate future performance. This is not entirely the case as it is known that unless you can see into the future you will not know what the future holds with certainty.
For instance Morningstar gives one to five stars as ratings. The score the company first gets on the risk of the fund is what the system is based on. The performance of the fund for the previous five years is then taken away from the original rating. The reliability of this system is not very good as the performance is based on past numbers and can not accurately predict the future earnings or losses on these funds.
Lipper Inc ranks its funds based on prior performance. The worse the performance the higher the rating to indicate a larger risk, the lower the rating the better the performance has been. The total return, preservation, consistency of the return, its tax efficiency and the expense are all factored in to determine the fund's actual risks. This method should be more accurate in determining the actual risk and profit factor involved in the mutual fund.
These are just two of several companies that provide ratings on these funds. Research them and take the time to evaluate the past performance before going with one of these companies for investment advice.
When you rely on fund ratings to provide the needed investment information you should be sure to look at more than one ratings system. You want to follow the ratings company that has the most successful record of predicting the future potential of mutual funds.
Mutual fund ratings while they can be accurate at times are not something to base your future investments on alone. If you rely on these alone you may as be blind folded to pick your investments.
Invest your time wisely and visit MutualFundPlanning.com for more tips on how do mutual funds work and mutual fund suitability compliance and improve your portfolio today.
Article Source: http://EzineArticles.com/?expert=Christopher_W_Smith
This is What Investment Securities Entail
Investment securities refer to the documents that show that, one has lent money to a company or even to the government. The money is refundable upon an agreed period of time. The documents are purchased most commonly through the stock market. There are many types of investment securities available in the stock market today. However, they call for proper scrutiny before one can buy them because, what may be favorable in one situation or for one person, may not necessarily apply to another.
The securities range from bonds, stocks, mutual funds, treasury bills and bonds, shares among others. The rates of returns vary greatly depending on the type of security and the risk involved in each. Before an investor can buy the securities, there are some factors that need consideration. One needs to identify what it is that they hope to achieve by buying the securities. Is the investment for the purpose of gaining more money for immediate use, or is it merely as a way for saving for the future.
Saving for the future could mean having a retirement plan, or saving to buy a home or saving for your children education. If the purpose for example is to accumulate money for immediate use, securities like government treasury bills may not be the best to go for. This is because they take a long time to mature and earn dividends. They may therefore be best suited for future plans like retirement or use during a long planned for holiday or vacation.
It is wise to be informed on the different types of investment securities available in the market today. They are mostly classified into two categories, namely; equity securities, which include common stocks and debt securities, which include bank notes, treasury bills and bonds. The institution from which one buys the securities is known as the issuer. One needs to be careful about the insurer he chooses to work with especially because of the commission charged.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INVESTMENT SECURITIES.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The securities range from bonds, stocks, mutual funds, treasury bills and bonds, shares among others. The rates of returns vary greatly depending on the type of security and the risk involved in each. Before an investor can buy the securities, there are some factors that need consideration. One needs to identify what it is that they hope to achieve by buying the securities. Is the investment for the purpose of gaining more money for immediate use, or is it merely as a way for saving for the future.
Saving for the future could mean having a retirement plan, or saving to buy a home or saving for your children education. If the purpose for example is to accumulate money for immediate use, securities like government treasury bills may not be the best to go for. This is because they take a long time to mature and earn dividends. They may therefore be best suited for future plans like retirement or use during a long planned for holiday or vacation.
It is wise to be informed on the different types of investment securities available in the market today. They are mostly classified into two categories, namely; equity securities, which include common stocks and debt securities, which include bank notes, treasury bills and bonds. The institution from which one buys the securities is known as the issuer. One needs to be careful about the insurer he chooses to work with especially because of the commission charged.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INVESTMENT SECURITIES.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Fund of Funds
Mutual fund investments come in various sub categories that require keen attention to details, lest an investor finds himself investing in the wrong type. A fund of funds investment is a bit different from other categories in that, it does not invest in other securities like stocks and bonds. Instead, it holds portfolio of other investment funds. In other words, it is a multi-manager type of investment.
Under this category there are also other sub categories, all of which hold portfolios for different investment securities. For example, there are mutual FOF, hedge FOF, private equity FoF and investment trust FOf. The features of all these categories are significantly different from each other, depending on the type of securities they invest in, the risk factor involved as well as the type of management required in each.
Due to their collective nature, fund of funds types of investment experience a wide range of diversity. Increase in diversity translates to relatively low risk as well as high rates of returns from the various securities. A manager of the FoF is entrusted with the big task of ensuring that your money is only invested in the best securities. He is entrusted with the task of checking that the performance of your investment is maintained at the best level possible.
FOFs are faced with some challenges as well, just like all other types of investments. For example, the rate of return is not always guaranteed; it may rise or fall depending on the market forces. In addition, FOFs are faced with higher management fees unlike other types of investments. This is because the portfolios that they hold are also subject to some management fees which are charged indirectly through the FOFs.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here Fund Of Funds.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Under this category there are also other sub categories, all of which hold portfolios for different investment securities. For example, there are mutual FOF, hedge FOF, private equity FoF and investment trust FOf. The features of all these categories are significantly different from each other, depending on the type of securities they invest in, the risk factor involved as well as the type of management required in each.
Due to their collective nature, fund of funds types of investment experience a wide range of diversity. Increase in diversity translates to relatively low risk as well as high rates of returns from the various securities. A manager of the FoF is entrusted with the big task of ensuring that your money is only invested in the best securities. He is entrusted with the task of checking that the performance of your investment is maintained at the best level possible.
FOFs are faced with some challenges as well, just like all other types of investments. For example, the rate of return is not always guaranteed; it may rise or fall depending on the market forces. In addition, FOFs are faced with higher management fees unlike other types of investments. This is because the portfolios that they hold are also subject to some management fees which are charged indirectly through the FOFs.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here Fund Of Funds.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Utilizing a Mutual Fund Research Guide
Whenever you are looking to buy into a new mutual fund, you probably already know that it will take a lot of research in order to make a wise investment decision regarding that fund. You want your portfolio of mutual funds, stocks, and bonds to grow and provide you with the funds to live the kind of lifestyle you want to live. If you have a large portfolio, the amount of time you spend in research can be very time-consuming, but you know it's the only way you're going to achieve that financial security you're looking for.
One of the easiest ways to diversify your portfolio and take the least amount of risk is by investing in mutual funds. By their very design they're made to mix a number of different types of securities. Although there are thousands of different funds to choose from, your task is made easier through the existence of fund research guides. No matter how much or little investment experience you have, these guides will help you make the right decisions.
At first glance, the field of stock market investment can seem totally overwhelming. How can you ever hope to understand everything there is to know about it? When you look at mutual funds, you'll find that every single one of the 10,000+ mutual funds will claim to be the best investment you can make to earn a consistently high profit.
Not to worry! There are many guides available to help you. As a beginner, you'll want to find a guide that starts with the basics, such as by explaining what a mutual fund is, what different types of funds are available, and how the funds operate. In addition, you'll want to know the factors you need to consider in an investment, be able to avoid the pitfalls many new investors fall into, know what advantages and disadvantages you should look for, and learn the basics of buying and selling.
As with most subjects these days, you'll find a wealth of helpful information on the internet which makes it a good place to start your research. One site you might want to look at is http://www.investopedia.com. This site, and others like it, will help prepare you to make the right decisions when the time comes for investment.
Another reliable mutual fund research guide is http://www.Troweprice.com. This is a good beginner site, because they take you through a step-by-step interactive guide to investing in various funds. Troweprice.com will give you pointers in identifying the right mutual fund investments for your needs.
The Securities and Exchange Commission (SEC) will supply you with a Mutual Fund Cost Calculator. You'll find this to be a great tool to help you know the actual costs of owning a particular mutual fund. It will also give you more information so that you'll be able to make an informed decision.
By law, a fund company must provide you with a prospectus to give you a detailed overview of the fund. If a company doesn't offer you one, you want to find another company who will. The prospectus will tell you what the objectives of that particular fund are.
By contacting various fund companies, you can get a lot of information from them that will help you decide which funds are right for you. Of all the information they will send, though, you'll find the prospectus to be most helpful. Many of the companies have online sites where you can fill out a form requesting information. The more information you have, the smarter the decisions you will make.
Invest your time wisely and visit MutualFundPlanning.com for more tips on mutual fund newsletters and fund selection tips and improve your portfolio today.
Article Source: http://EzineArticles.com/?expert=Christopher_W_Smith
One of the easiest ways to diversify your portfolio and take the least amount of risk is by investing in mutual funds. By their very design they're made to mix a number of different types of securities. Although there are thousands of different funds to choose from, your task is made easier through the existence of fund research guides. No matter how much or little investment experience you have, these guides will help you make the right decisions.
At first glance, the field of stock market investment can seem totally overwhelming. How can you ever hope to understand everything there is to know about it? When you look at mutual funds, you'll find that every single one of the 10,000+ mutual funds will claim to be the best investment you can make to earn a consistently high profit.
Not to worry! There are many guides available to help you. As a beginner, you'll want to find a guide that starts with the basics, such as by explaining what a mutual fund is, what different types of funds are available, and how the funds operate. In addition, you'll want to know the factors you need to consider in an investment, be able to avoid the pitfalls many new investors fall into, know what advantages and disadvantages you should look for, and learn the basics of buying and selling.
As with most subjects these days, you'll find a wealth of helpful information on the internet which makes it a good place to start your research. One site you might want to look at is http://www.investopedia.com. This site, and others like it, will help prepare you to make the right decisions when the time comes for investment.
Another reliable mutual fund research guide is http://www.Troweprice.com. This is a good beginner site, because they take you through a step-by-step interactive guide to investing in various funds. Troweprice.com will give you pointers in identifying the right mutual fund investments for your needs.
The Securities and Exchange Commission (SEC) will supply you with a Mutual Fund Cost Calculator. You'll find this to be a great tool to help you know the actual costs of owning a particular mutual fund. It will also give you more information so that you'll be able to make an informed decision.
By law, a fund company must provide you with a prospectus to give you a detailed overview of the fund. If a company doesn't offer you one, you want to find another company who will. The prospectus will tell you what the objectives of that particular fund are.
By contacting various fund companies, you can get a lot of information from them that will help you decide which funds are right for you. Of all the information they will send, though, you'll find the prospectus to be most helpful. Many of the companies have online sites where you can fill out a form requesting information. The more information you have, the smarter the decisions you will make.
Invest your time wisely and visit MutualFundPlanning.com for more tips on mutual fund newsletters and fund selection tips and improve your portfolio today.
Article Source: http://EzineArticles.com/?expert=Christopher_W_Smith
Energy Funds
With the many types of investments available today, one needs to determine carefully, those which are likely to survive tough economic times as well as competition that is likely to be faced in the market. When it comes to mutual funds in particular, there is quite a lot to choose from. Energy funds are just one of the many categories in this type of investment.
Everywhere the world over, people are making use of energy in one way or the other and the demand is rising with each passing day. This tells you that returns on these investments are almost guaranteed. The investments are also likely to last long and the companies selling them will be in the market for as long as there is demand for the products in their different forms.
With the emerging and expanding economies like China and India, there is likelihood that demand for energy will continue to rise for the purposes of fueling cars and maintaining air-conditioned homes. On this juncture therefore, it is worth noting that, it is far much better to invest in mutual funds than in individual stocks.
When an investor chooses to invest his money in the energy sector, he is highly encouraged to do his homework and eliminate those firms that are likely to lead him astray. There are some investment companies that get to a point of feeling like, they have invested enough and thus do not welcome new investors. This is the quickest way to bring down a pool of money because, it means that, there is no growth. Other categories of energy investments to avoid are the loaded ones. They come with many expenses that leave you with a very slim profit margin.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here ENERGY FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Everywhere the world over, people are making use of energy in one way or the other and the demand is rising with each passing day. This tells you that returns on these investments are almost guaranteed. The investments are also likely to last long and the companies selling them will be in the market for as long as there is demand for the products in their different forms.
With the emerging and expanding economies like China and India, there is likelihood that demand for energy will continue to rise for the purposes of fueling cars and maintaining air-conditioned homes. On this juncture therefore, it is worth noting that, it is far much better to invest in mutual funds than in individual stocks.
When an investor chooses to invest his money in the energy sector, he is highly encouraged to do his homework and eliminate those firms that are likely to lead him astray. There are some investment companies that get to a point of feeling like, they have invested enough and thus do not welcome new investors. This is the quickest way to bring down a pool of money because, it means that, there is no growth. Other categories of energy investments to avoid are the loaded ones. They come with many expenses that leave you with a very slim profit margin.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here ENERGY FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
This is What Hedge Funds Entail
There are lots of investment opportunities that people can go for if they decide to invest. In the mutual funds category, there are even numerous sub categories that one can choose from, depending on what they hope to achieve from the investment. Hedge funds are a type of investment open to a limited order of investors. The level of operation for these investments is a bit diversified than in other securities.
The investment strategy that governs hedge funds is such that the stocks can further invest in other broad ranges of securities including shares, debt and commodities. This is normally done with the aim of spreading the risk over a larger investment base. The other aim is definitely to increase or enlarge the return base. However, even with all these advantages, the stocks are faced with the challenge of having to pay higher fees for performance. The open ended nature of the stocks also makes it more vulnerable to risk unlike other investment ventures.
As earlier noted, the investments can fetch quite a lot in terms of the net asset value. The figures can run into many billions of dollars. The reason is that the management is much easier since the pool is only limited to a few investors, and hence it easily dominates the market. The risk is equally higher than that of other securities.
For an investor interested in hedge funds, a few things are worth noting. The investments are merely speculative and involve a lot of risk. They therefore call for an investor who has developed crocodile skin; one who will be able to take all in one stride in case he loses all that he has invested. The investments are also unregistered and do not offer any documents to investors. This tells you that proof of ownership may be hard in case of faulty operations.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BOND MUTUAL FUNDS. If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The investment strategy that governs hedge funds is such that the stocks can further invest in other broad ranges of securities including shares, debt and commodities. This is normally done with the aim of spreading the risk over a larger investment base. The other aim is definitely to increase or enlarge the return base. However, even with all these advantages, the stocks are faced with the challenge of having to pay higher fees for performance. The open ended nature of the stocks also makes it more vulnerable to risk unlike other investment ventures.
As earlier noted, the investments can fetch quite a lot in terms of the net asset value. The figures can run into many billions of dollars. The reason is that the management is much easier since the pool is only limited to a few investors, and hence it easily dominates the market. The risk is equally higher than that of other securities.
For an investor interested in hedge funds, a few things are worth noting. The investments are merely speculative and involve a lot of risk. They therefore call for an investor who has developed crocodile skin; one who will be able to take all in one stride in case he loses all that he has invested. The investments are also unregistered and do not offer any documents to investors. This tells you that proof of ownership may be hard in case of faulty operations.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BOND MUTUAL FUNDS. If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Why Bond Mutual Funds Are So Popular
Mutual funds are investments that bring money together into a common pool, in order for it to bear a return, which is then shared among the investors. Bond mutual funds refer to debt securities that one invests in, with the aim of protecting the initial principal paid while getting a regular income from the investment. There is a dollar value of one share in the investment, which is basically the trading value of the investment.
Mutual funds are popular with many investors for two main reasons, i.e. income earning and opportunity for diversification. If you check well around the stock market, you will realize that this type of investment fetches much higher returns in form of dividends than most others. They are also considered to be low risk investments, but not entirely risk-free. The risk is low due to the fact that the investment monies are spread out among many stocks.
In the United States, there are three basic types of bond mutual funds. These are U.S. Government, municipal and corporate bonds. Just like all other types of investments, they attract different rates of return and the amount of risk involved also differs. The U.S. bond investments are issued by the government or its agencies. The biggest advantage with them is that they are considered the safest since they are backed by the credit of the government. The only risk involved is the fluctuation of interest rates and inflation.
Municipal bonds are also invested in debt securities and are issued by the state and local governments to pay for the local public utilities and facilities. These are projects like schools, highways and bridges. Their advantage is that they are tax-exempt and are also backed by the government. The risky bit is that, municipalities tend to go bankrupt way too often, leaving these investments in a risky state.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BOND MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual funds are popular with many investors for two main reasons, i.e. income earning and opportunity for diversification. If you check well around the stock market, you will realize that this type of investment fetches much higher returns in form of dividends than most others. They are also considered to be low risk investments, but not entirely risk-free. The risk is low due to the fact that the investment monies are spread out among many stocks.
In the United States, there are three basic types of bond mutual funds. These are U.S. Government, municipal and corporate bonds. Just like all other types of investments, they attract different rates of return and the amount of risk involved also differs. The U.S. bond investments are issued by the government or its agencies. The biggest advantage with them is that they are considered the safest since they are backed by the credit of the government. The only risk involved is the fluctuation of interest rates and inflation.
Municipal bonds are also invested in debt securities and are issued by the state and local governments to pay for the local public utilities and facilities. These are projects like schools, highways and bridges. Their advantage is that they are tax-exempt and are also backed by the government. The risky bit is that, municipalities tend to go bankrupt way too often, leaving these investments in a risky state.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BOND MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Why You Need to Check Performance Levels Before Buying Mutual Funds
Investors have a lot of choices to make when considering putting their money in any given type of investment. It therefore goes without saying that, some tips on what to do in the process of buying the investments are in order. Bond mutual funds are among those types of investments that call for basic knowledge on how they operate, the risk they attract and the potential rate of return they carry.
When buying bond mutual funds, get to know the basic make up of these investments. They come in a number of securities which include stocks, bonds and certificates of deposit. The make up generally is what dictates what kind of return one is going to expect, as well as the risk that is posed by the investment. Once you are familiar with the make up, you are now in a position to identify your investment goals. Do you want a kind of investment that will enable you to pay for education, buy a home or just assist you with your retirement plans?
Once your goals are clear, determine how the bond mutual funds fit into your overall portfolio, meaning, you have to determine how affordable they are to you. Only a portion of your assets should be committed towards the bonds. Come up with a percentage that you can comfortably stick to without overstretching your resources. In addition, consider the tolerance for risk for these bonds and make your decision wisely.
You are now ready to start your search on where or which company to buy your bonds from. In so doing you should compare the performance levels, the risk involved as well as other parameters that are of concern. Check to see the expenses that the bonds are likely to attract, which are basically the managers cost for handling the investment. Also check the volatility of the bonds especially if you are looking for a long term investment.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
When buying bond mutual funds, get to know the basic make up of these investments. They come in a number of securities which include stocks, bonds and certificates of deposit. The make up generally is what dictates what kind of return one is going to expect, as well as the risk that is posed by the investment. Once you are familiar with the make up, you are now in a position to identify your investment goals. Do you want a kind of investment that will enable you to pay for education, buy a home or just assist you with your retirement plans?
Once your goals are clear, determine how the bond mutual funds fit into your overall portfolio, meaning, you have to determine how affordable they are to you. Only a portion of your assets should be committed towards the bonds. Come up with a percentage that you can comfortably stick to without overstretching your resources. In addition, consider the tolerance for risk for these bonds and make your decision wisely.
You are now ready to start your search on where or which company to buy your bonds from. In so doing you should compare the performance levels, the risk involved as well as other parameters that are of concern. Check to see the expenses that the bonds are likely to attract, which are basically the managers cost for handling the investment. Also check the volatility of the bonds especially if you are looking for a long term investment.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
How to Identify Performing Mutual Funds
Mutual funds are among the most preferred types of securities in the market today. This is because, they have so many advantages compared to other types of investment. While stock investing is proving difficult with the rising economic hardships, it is not uncommon to find people still wanting to invest in mutual funds. However, one is advised not to invest blindly, but to have a look at those that are considered to be the best performing investments.
The factors to consider in order to identify the best performing investments are many, and looking at them as a combination improves on the chances of going for nothing less than the best option. One of the factors is income in form of dividends or bond interest payment. This is especially so because of the declining value in stocks. Despite the situation, one still needs an assurance that there will be returns.
The other factor to consider while looking for the best performing mutual funds are the likely future trends. Looking at the history of any given type of investment will most likely give you a hint of how the same investment is likely to perform in future. Do not dismiss an investment on the basis of its current performance because the situation is likely to change, either for good or for worse.
Long-term performance is the thing to look at. Any stock that has performed favorably over a period of one or two years is one that is not to be ignored. This record however, should not be done only for the previous year, but should be one that has a long standing in the market. Do not chase after those stocks that have just began performing well in the market and do not also go for those that you are not well aware of.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here PERFORMING MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The factors to consider in order to identify the best performing investments are many, and looking at them as a combination improves on the chances of going for nothing less than the best option. One of the factors is income in form of dividends or bond interest payment. This is especially so because of the declining value in stocks. Despite the situation, one still needs an assurance that there will be returns.
The other factor to consider while looking for the best performing mutual funds are the likely future trends. Looking at the history of any given type of investment will most likely give you a hint of how the same investment is likely to perform in future. Do not dismiss an investment on the basis of its current performance because the situation is likely to change, either for good or for worse.
Long-term performance is the thing to look at. Any stock that has performed favorably over a period of one or two years is one that is not to be ignored. This record however, should not be done only for the previous year, but should be one that has a long standing in the market. Do not chase after those stocks that have just began performing well in the market and do not also go for those that you are not well aware of.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here PERFORMING MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Making Informed Choices on Mutual Funds Investing
Many people are turning to mutual funds as a way of investing for their future. This is common with people who need finances for school fees, upkeep in retirement or just to buy a home. This type of investment has a number of different advantages that come with it and it also has a number of disadvantages compared to others. All the same, they carry potential risk with them and it is advisable for one to learn as much as they can about them before putting your money into them.
Mutual funds call for a lot of knowledge in how they operate and the rate of return they are likely to attract. Note that the investments come in various types that include bonds, which fall into three categories of government bonds, municipal bonds and corporate bonds. There are also stocks which include growth stocks, international stocks, large cap stocks and small cap stocks. Knowing these different types will give you a general idea of the kind of returns to expect.
Apart from the government and municipal bonds, take note that other forms of mutual funds are not guaranteed or insured by the FDIC or any government body. This tells you that even if you bought the investment from a bank and have the name of the bank on the investment, you could still lose your money in case of inflation or fluctuation of prices. That are just some of the risks involved.
Note also that recent past performance of any given investment is not always the best indicator of how it is likely to perform in the near future. If the investment had a dazzling high return last year, do not be too enthusiastic that it will do the same this year. However, if you made a comparison of the performance over along period of time with other types of investments, you are likely to make an informed choice.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS INVESTING
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual funds call for a lot of knowledge in how they operate and the rate of return they are likely to attract. Note that the investments come in various types that include bonds, which fall into three categories of government bonds, municipal bonds and corporate bonds. There are also stocks which include growth stocks, international stocks, large cap stocks and small cap stocks. Knowing these different types will give you a general idea of the kind of returns to expect.
Apart from the government and municipal bonds, take note that other forms of mutual funds are not guaranteed or insured by the FDIC or any government body. This tells you that even if you bought the investment from a bank and have the name of the bank on the investment, you could still lose your money in case of inflation or fluctuation of prices. That are just some of the risks involved.
Note also that recent past performance of any given investment is not always the best indicator of how it is likely to perform in the near future. If the investment had a dazzling high return last year, do not be too enthusiastic that it will do the same this year. However, if you made a comparison of the performance over along period of time with other types of investments, you are likely to make an informed choice.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS INVESTING
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
How to Identify Mutual Funds to Invest In
When looking for a place to invest in, we are always looking for that investment that will give us the best returns, the best services and the lowest risk. Many people are now opting for mutual funds because they tend to meet these qualifications. While this is on a more general note, the wisdom lies in being able to know the type of mutual funds that specifically meets these conditions. There are many types of bonds, holdings and securities that are to be found under this type of investment.
The best type of investment is the one that presents you with the chance to diversify your chances of getting good returns. The investments that are in the current market and which can provide you with diversity include bio-tech mutual funds. which include companies like Amgen (NASDAQ:AMGN), Genentech (NYSE:DNA) Gilead Sciences (NASDAQ:GILD), Rydex Biotechnology Inv, and Quaker's Biotech Pharma-Healthcare.
Bio-tech investments are better priced than most others and they are commonly invested in by large corporations. The secret to getting the best investment is to buy those that are associated with large companies as compared to those owned by small trying companies. However, that is not all. Getting the big picture on their ratings will also go a long way in helping you determine how good they are. If they are charging high fees in the hard economic times, then they are probably the type of investments to keep away from.
Other investments that you may find in the market and which can be considered to be relatively favourable are in the domestic, bond, international, index and other sectors categories. The largest company that trades in them does a lot of research to ensure that they keep up with the current happenings in the world of investment. Their services have also got a four or five star rating from the Morning Star Newspaper.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The best type of investment is the one that presents you with the chance to diversify your chances of getting good returns. The investments that are in the current market and which can provide you with diversity include bio-tech mutual funds. which include companies like Amgen (NASDAQ:AMGN), Genentech (NYSE:DNA) Gilead Sciences (NASDAQ:GILD), Rydex Biotechnology Inv, and Quaker's Biotech Pharma-Healthcare.
Bio-tech investments are better priced than most others and they are commonly invested in by large corporations. The secret to getting the best investment is to buy those that are associated with large companies as compared to those owned by small trying companies. However, that is not all. Getting the big picture on their ratings will also go a long way in helping you determine how good they are. If they are charging high fees in the hard economic times, then they are probably the type of investments to keep away from.
Other investments that you may find in the market and which can be considered to be relatively favourable are in the domestic, bond, international, index and other sectors categories. The largest company that trades in them does a lot of research to ensure that they keep up with the current happenings in the world of investment. Their services have also got a four or five star rating from the Morning Star Newspaper.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
This is What Investment in Mutual Funds Entail
Mutual funds have a long history and they refer to a professionally managed collective investment scheme. By collective, i mean that, they are owned by many investors who come together and put their money in a common pool so as to attract large returns. The pools are managed by a manager who ensures that the money is traded in often. The profits or losses are distributed among the investors annually in the form of dividends.
The investments attract different types of returns depending on the type of security they hold. Over the years, the returns have been seen to fluctuate but all the same, the investments are considered to be among the most stable in the market. Although the stock market crash of 1929 greatly tampered with the growth of the investments, they later recovered, especially after the Securities Act was passed in 1933. Since then, people have really opted to have investments in these stocks especially as part of their retirement plans.
Mutual funds operate under many different securities, which include but are not limited to cash instruments, stocks and bonds, all of which are further divided into sub categories. Stocks for example, are divided into sectors, which could be technology, bio-tech, agriculture or utilities. Bonds are divided according to the type of insurer and these are the government, municipals and corporations. They can also be classified according to the period of time they take to mature.
An investment in mutual funds means that you are subject to a special set of regulatory, accounting and tax rules. The amount of taxes subject on the investment largely depends on the criteria that was used to attract the income that is to be divided among the investors. Others are entirely tax-free like government and municipal bonds. Others are not taxed as long as they distribute 90% of the income to shareholders.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INVESTMENT IN MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The investments attract different types of returns depending on the type of security they hold. Over the years, the returns have been seen to fluctuate but all the same, the investments are considered to be among the most stable in the market. Although the stock market crash of 1929 greatly tampered with the growth of the investments, they later recovered, especially after the Securities Act was passed in 1933. Since then, people have really opted to have investments in these stocks especially as part of their retirement plans.
Mutual funds operate under many different securities, which include but are not limited to cash instruments, stocks and bonds, all of which are further divided into sub categories. Stocks for example, are divided into sectors, which could be technology, bio-tech, agriculture or utilities. Bonds are divided according to the type of insurer and these are the government, municipals and corporations. They can also be classified according to the period of time they take to mature.
An investment in mutual funds means that you are subject to a special set of regulatory, accounting and tax rules. The amount of taxes subject on the investment largely depends on the criteria that was used to attract the income that is to be divided among the investors. Others are entirely tax-free like government and municipal bonds. Others are not taxed as long as they distribute 90% of the income to shareholders.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INVESTMENT IN MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
How Mutual Fund Analysis is Done
Before putting your money into any form of investment, it is advisable to carry out a market analysis so as to get a view of how they are likely to perform in future. The analysis will focus on the rate of return, the risk involved, the ability of managers to skillfully manage the investment as well as the market trends over the past years. The analysis should also be both qualitative and quantitative. Qualitative analysis looks at the managers ability to coordinate the happenings that relate to the investment.
Quantitative analysis is more concerned with figures that are involved in calculating risk, performance and returns. For proper analysis, one has to be equipped with the necessary skills and avoid mistakes that are common during calculations. The two most common mistakes are benchmarking and lack of objectivity or bias. To avoid improper benchmarking, there is need to make use or reliable bench markers analysis. For example, the Morning Star Benchmark values that have been used over the years are more reliable because they compare the performance of a number of investments over a number of years.
Bias often arises when financial reporters only reflect those mutual funds that have performed favorably over the recent past. They tend to overlook those that have not been doing so well and this reflects poorly on them. If a benchmark is created based on this criteria, bias is likely to arise. The best way to avoid bias is to look at a long time periods so that the under performing and the over performing investments are all reflected.
To be more accurate on mutual funds analysis, one can now make use of software that is readily available on the Internet. The software includes programs like Zephyr's Style Advisory. Proper analysis will help you pick the most reliable manager, evaluate his performance as well as the consistency of that performance.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS ANALYSIS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Quantitative analysis is more concerned with figures that are involved in calculating risk, performance and returns. For proper analysis, one has to be equipped with the necessary skills and avoid mistakes that are common during calculations. The two most common mistakes are benchmarking and lack of objectivity or bias. To avoid improper benchmarking, there is need to make use or reliable bench markers analysis. For example, the Morning Star Benchmark values that have been used over the years are more reliable because they compare the performance of a number of investments over a number of years.
Bias often arises when financial reporters only reflect those mutual funds that have performed favorably over the recent past. They tend to overlook those that have not been doing so well and this reflects poorly on them. If a benchmark is created based on this criteria, bias is likely to arise. The best way to avoid bias is to look at a long time periods so that the under performing and the over performing investments are all reflected.
To be more accurate on mutual funds analysis, one can now make use of software that is readily available on the Internet. The software includes programs like Zephyr's Style Advisory. Proper analysis will help you pick the most reliable manager, evaluate his performance as well as the consistency of that performance.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS ANALYSIS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual Funds Advice That You Need to Put Into Consideration
While investment in stocks, bonds and other types of securities seems to be the in thing today, there is need to seek for advice before putting your money into any of these investments. The oldest advice that has always been given is, not to put all your eggs in one basket. This tells you that, you need to diversify in the type of investment you choose to put your money into. Mutual funds provide you with such diversity because, they come in many categories and sub-categories.
Before buying any type of mutual fund, it is advisable to look at the ratings of the investments. Ratings in this case, refers to the performance that the investments have exhibited over years compared to other types. The Morning Star Rating is what is commonly used, but you are advised to look at other systems as well. The differences in the ratings will give you an idea of how well the investments are likely to perform in the future.
The other thing to look at is the performance which is closely linked to the rating. Do not be misled by the performance that covers the past few years. For the best report and reflection, have a comparison for as many years as you can. This will normally be given in figures and percentages. As you look at the performance of the funds themselves, be sure to also check the performance of the investors as well.
This calls for you to compare the returns of the mutual funds versus the returns of the investor in that investment. This is reflected in the investors decision to buy or sell the stocks depending on the performance of the investments. Other details that will direct you in your decision to invest or not are the ownership details and annual turnover rates. Big corporations are likely to have well-doing investments as compared to small ones.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS ADVICE
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Before buying any type of mutual fund, it is advisable to look at the ratings of the investments. Ratings in this case, refers to the performance that the investments have exhibited over years compared to other types. The Morning Star Rating is what is commonly used, but you are advised to look at other systems as well. The differences in the ratings will give you an idea of how well the investments are likely to perform in the future.
The other thing to look at is the performance which is closely linked to the rating. Do not be misled by the performance that covers the past few years. For the best report and reflection, have a comparison for as many years as you can. This will normally be given in figures and percentages. As you look at the performance of the funds themselves, be sure to also check the performance of the investors as well.
This calls for you to compare the returns of the mutual funds versus the returns of the investor in that investment. This is reflected in the investors decision to buy or sell the stocks depending on the performance of the investments. Other details that will direct you in your decision to invest or not are the ownership details and annual turnover rates. Big corporations are likely to have well-doing investments as compared to small ones.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS ADVICE
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
What Money Market Mutual Funds Entail
Money market mutual funds are also known as principal stability investments and they are controlled by the Securities and Exchange Commission. They operate in such a way that they limit losses that are as a result of credit, market and liquidity instabilities. They have the highest rated debt in the United States and they come in the form of government securities and purchases agreement, short-term bonds among others.
These funds are common with many banks in the United States. The banks normally offer high returns compared to other investment companies. They also provide liquidity and primary preservation which then translates to longer maturity, lower rated bonds and foreign currency denominated debt. Longer preservation means that the risk involved is much lower.
There are many different types of money market mutual funds. They include retail money fund, which are primarily offered to individuals and they hold about 35% of all money market investments. These investments deal with short-term debts, for example the US treasury bills and commercial paper. They are further sub-divided into government-only, non-governmental and tax-free investments. their advantage is that they bring along higher returns than most others.
Institutional money investments is another category which is characterized by high minimum investment and low expenses. They are commonly invested in by government corporations and fiduciaries. The largest institutional money investment companies include JP Morgan, Black Rock, Western Asset, Columbia, Dreyfus, AIM and Evergreen (Wachovia). To make a decision on which one to buy the investments from, you are advised to compare their rates of performance so as to make an informed decision.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MONEY MARKET MUTUAL FUNDS
These funds are common with many banks in the United States. The banks normally offer high returns compared to other investment companies. They also provide liquidity and primary preservation which then translates to longer maturity, lower rated bonds and foreign currency denominated debt. Longer preservation means that the risk involved is much lower.
There are many different types of money market mutual funds. They include retail money fund, which are primarily offered to individuals and they hold about 35% of all money market investments. These investments deal with short-term debts, for example the US treasury bills and commercial paper. They are further sub-divided into government-only, non-governmental and tax-free investments. their advantage is that they bring along higher returns than most others.
Institutional money investments is another category which is characterized by high minimum investment and low expenses. They are commonly invested in by government corporations and fiduciaries. The largest institutional money investment companies include JP Morgan, Black Rock, Western Asset, Columbia, Dreyfus, AIM and Evergreen (Wachovia). To make a decision on which one to buy the investments from, you are advised to compare their rates of performance so as to make an informed decision.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MONEY MARKET MUTUAL FUNDS
Why You Need to Do a Mutual Fund Research Before Investing
When investing in mutual funds, it is always advisable to first conduct some market research to be able to determine which category is best to invest in. Research is best carried out by professionals and investment managers but all the same, this does not leave out an investor who is willing to do so for his own good and for the sake of information.
You may consider researching by category and this means that you will look at the types of mutual funds available. As you look at the category, you will also look at the type of security that particular category invests in so that you can determine the kind of returns to expect. Another thing to look at while at the category is the risk each type of investment carries. While high risk may be thought of to translate to good investment, this may not necessarily be the case in every situation,
Mutual funds are generally known to carry low risk, owing to the fact that they are collectively owned and hence attract a lot of investors. The higher the risk an investment carries, the more likely it is to perform poorly. For this reason you need to compare the level of risk in each type of investment, which is basically another criteria that one can use in the research. Comparison helps you to make an informed choice on the best way to go.
One other thing to look at is the price history of the investment. The performance of the investments in the broader market will help you establish what kind of performance to expect in future. However, do not rely on the prices of the recent past, but dig deeper and see how the prices were at least five years and above ago.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUND RESEARCH
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
You may consider researching by category and this means that you will look at the types of mutual funds available. As you look at the category, you will also look at the type of security that particular category invests in so that you can determine the kind of returns to expect. Another thing to look at while at the category is the risk each type of investment carries. While high risk may be thought of to translate to good investment, this may not necessarily be the case in every situation,
Mutual funds are generally known to carry low risk, owing to the fact that they are collectively owned and hence attract a lot of investors. The higher the risk an investment carries, the more likely it is to perform poorly. For this reason you need to compare the level of risk in each type of investment, which is basically another criteria that one can use in the research. Comparison helps you to make an informed choice on the best way to go.
One other thing to look at is the price history of the investment. The performance of the investments in the broader market will help you establish what kind of performance to expect in future. However, do not rely on the prices of the recent past, but dig deeper and see how the prices were at least five years and above ago.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUND RESEARCH
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual Funds - What They Are
Mutual funds can be defined as collective investments that bring together money from many different investors into a common pool, which is then professionally managed. The money is invested in other types of securities that attract interests, which are then divided among the stakeholders. The investments come in many different types, which include cash instruments, stocks, bonds and money market funds.
Mutual funds come in many different types according to the type of risk they carry, that is either high or low risk, the length of time they take to mature, the type of insurer and also depending on whether they are local or foreign. All these sub-categories are key in determining the amount of return or interest that they attract and also the regulatory terms they are subject to as far as taxes and accounting are concerned.
These investments also incur expenses because the manager has to be paid handling charges. These are basically the management fees. On the other hand there are non-management fees which include a number of other things. Back to the management fees, there are administrative charges, advisory charges and contractual charges that are all payable regardless of the type of investment one has. The non management fees are on the other hand are not related to the management of the mutual funds but they all go towards making your investment worthwhile.
They include transfer agent expenses, custodian expense, registration expense, board of directors or trustees expense, accounting and auditing fees as well as printing and postage fee for processing the reports for investors. There are also the investor fees and expenses which are incurred if an investor chooses to invest through a broker. These will entail even the brokerage commissions.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here WHAT ARE MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual funds come in many different types according to the type of risk they carry, that is either high or low risk, the length of time they take to mature, the type of insurer and also depending on whether they are local or foreign. All these sub-categories are key in determining the amount of return or interest that they attract and also the regulatory terms they are subject to as far as taxes and accounting are concerned.
These investments also incur expenses because the manager has to be paid handling charges. These are basically the management fees. On the other hand there are non-management fees which include a number of other things. Back to the management fees, there are administrative charges, advisory charges and contractual charges that are all payable regardless of the type of investment one has. The non management fees are on the other hand are not related to the management of the mutual funds but they all go towards making your investment worthwhile.
They include transfer agent expenses, custodian expense, registration expense, board of directors or trustees expense, accounting and auditing fees as well as printing and postage fee for processing the reports for investors. There are also the investor fees and expenses which are incurred if an investor chooses to invest through a broker. These will entail even the brokerage commissions.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here WHAT ARE MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Types of Mutual Fund Stocks
Before one can decide to invest in mutual funds, they should take time to get to understand the different categories and sub-categories that exist under this type of investment. It is also wise to understand the criteria used in classifying them. This will give an investor some insight on the risk involved, the potential rate of return as well as the regulation and taxes the investment is subject to.
There are three major types of stocks that an investor may choose from and these are aggressive-growth stocks, long-term growth stocks, or growth & income stocks. Just like other types of mutual funds, stocks have big potential for great returns and all one needs to do is to compare the finer details so as to make an informed and objective choice.
Aggressive-growth stocks are characteristic of small but fast growing companies like those deeply involved in technological advances.The term aggressive gives you a hint on the kind of growth to expect from this type of stock. In most cases, the returns have proven to increase rather than decrease. If you are interested in a long-term investment, this is the stock for you. Long-term growth stocks are more like the aggressive ones and they are more stable.
The reason is because they are invested in large companies which tend to have more stable businesses and steady growth rates. Such investments are favorable for long-term investments for investors who are not comfortable with the aggressive and sudden changes that are characteristic of aggressive stocks. Growth and income mutual funds are invested in more stable companies and they are good for cautious investors.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS STOCKS
There are three major types of stocks that an investor may choose from and these are aggressive-growth stocks, long-term growth stocks, or growth & income stocks. Just like other types of mutual funds, stocks have big potential for great returns and all one needs to do is to compare the finer details so as to make an informed and objective choice.
Aggressive-growth stocks are characteristic of small but fast growing companies like those deeply involved in technological advances.The term aggressive gives you a hint on the kind of growth to expect from this type of stock. In most cases, the returns have proven to increase rather than decrease. If you are interested in a long-term investment, this is the stock for you. Long-term growth stocks are more like the aggressive ones and they are more stable.
The reason is because they are invested in large companies which tend to have more stable businesses and steady growth rates. Such investments are favorable for long-term investments for investors who are not comfortable with the aggressive and sudden changes that are characteristic of aggressive stocks. Growth and income mutual funds are invested in more stable companies and they are good for cautious investors.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS STOCKS
This is What a "No-Load" Mutual Fund Entails
Mutual funds incur some expenses during the trading process and during the initial buying of the investment. The management charges a commission for buying the shares on behalf of the investor. These is what is referred to as the load on an investment. The charges differ according to net asset value of any particular type of investment. However, some mutual funds are no-load investments, meaning that they do not incur such expenses.
In that regard, whatever amount of money an investor gives to an investment company goes directly into buying shares for him. Before buying any shares an investor should establish whether an investment is a load or no load investment. This can easily be determined by having a look at the prospectus of that particular investment. The load on an investment comes in different forms which include front-ended, back-ended or both options.
A front-end load is a direct deduction from the investment. For example, if an investor invests $2000 in a pool that has a load of 5%, then $100 will go towards catering for the expenses involved. This leaves the investor with only $1900 with which he can buy shares. This means that the returns will most definitely be lower than what he would have got if he had invested the full amount. The impact felt is worse if the investment is a short-term one.
No load mutual funds go along way in ensuring that an investor gets his full return on the whole amount of money that he gives out to buy shares. Load investments have to perform for a number of years before an investor can realize the kind of returns he would otherwise realize from a no-load investment. Since the no-load investments allows an investor to start off without any expenses, the probability of realizing huge returns is high.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here NO LOAD MUTUAL FUND
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
In that regard, whatever amount of money an investor gives to an investment company goes directly into buying shares for him. Before buying any shares an investor should establish whether an investment is a load or no load investment. This can easily be determined by having a look at the prospectus of that particular investment. The load on an investment comes in different forms which include front-ended, back-ended or both options.
A front-end load is a direct deduction from the investment. For example, if an investor invests $2000 in a pool that has a load of 5%, then $100 will go towards catering for the expenses involved. This leaves the investor with only $1900 with which he can buy shares. This means that the returns will most definitely be lower than what he would have got if he had invested the full amount. The impact felt is worse if the investment is a short-term one.
No load mutual funds go along way in ensuring that an investor gets his full return on the whole amount of money that he gives out to buy shares. Load investments have to perform for a number of years before an investor can realize the kind of returns he would otherwise realize from a no-load investment. Since the no-load investments allows an investor to start off without any expenses, the probability of realizing huge returns is high.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here NO LOAD MUTUAL FUND
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
This is What a Balanced Mutual Fund Entails
Investors need to be well aware of the kind of investment they are putting their money into. This calls for proper analysis as well as enhanced understanding of what a majority of the terms and concepts really refer to. Mutual funds are a type of investment that have with them a number of differing concepts, and which could help an investor make very informed and up-to-date choices on the kind of investment they want to make.
A balanced mutual fund is a concept that refers to a type of investment which includes a little bit of stock components, bond component as well as the money market component, all combined in one category. They are a type of hybrid that can either be of high equity or conservative/higher fixed income component orientation. In either case, the main aim of balanced investments is to provide investors with a combination of safety, meaning that the risk is evenly spread, income and potential value appreciation.
Since stocks, bonds and money market investments carry different amounts of risk, having them combined into a single component means that the risk is evenly spread and they all help each other balance especially in the hard economic times when the prices seem not to be doing so well. They also give the investors a perfect opportunity to engage in a form of a one-stop shopping, where they can get all they are looking for in a single investment.
Balanced mutual funds also provide an excellent opportunity for the investment manager to engage in market timing, which is nothing more than knowing when to increase or decrease the allocation of shares through stocks, fixed income or cash. A manager is able to gauge when stocks are going to increase in value and he can thus adjust his stocks or fixed income appropriately to keep up with the market values.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BALANCED MUTUAL FUND
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
A balanced mutual fund is a concept that refers to a type of investment which includes a little bit of stock components, bond component as well as the money market component, all combined in one category. They are a type of hybrid that can either be of high equity or conservative/higher fixed income component orientation. In either case, the main aim of balanced investments is to provide investors with a combination of safety, meaning that the risk is evenly spread, income and potential value appreciation.
Since stocks, bonds and money market investments carry different amounts of risk, having them combined into a single component means that the risk is evenly spread and they all help each other balance especially in the hard economic times when the prices seem not to be doing so well. They also give the investors a perfect opportunity to engage in a form of a one-stop shopping, where they can get all they are looking for in a single investment.
Balanced mutual funds also provide an excellent opportunity for the investment manager to engage in market timing, which is nothing more than knowing when to increase or decrease the allocation of shares through stocks, fixed income or cash. A manager is able to gauge when stocks are going to increase in value and he can thus adjust his stocks or fixed income appropriately to keep up with the market values.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BALANCED MUTUAL FUND
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Index Mutual Funds - Ensuring Stability of a Specific Financial Market
Mutual funds come in a number of different categories, which all vary according to the rates of return, risk factor involved as well as the period of time they take to mature. An index mutual fund is a category of investment that seeks to ensure stability of a specific financial market, regardless of the prevailing market condition, be they good or bad. They do so by tracking the performance of the securities in a particular investment.
To ease the tracking movement, there is a software that one can make use of. The software requires little human input and hence, there is minimal interference with the records. This means that index mutual funds therefore require no form of active management and can do well in passive management. This directly translates to lower management fees and lower taxes as well.
Index investments can be bought from many investment managers, some of which include Dow Jones Industrial Average, the Wishire 5000 and the FTSE 100. Other indexes have been personalized by some individual companies in order to be able to develop investment pricing systems. The indexes, whether personalized or captured in a software, should be guided by research which touches on dividends, earnings, book value and sales as well.
There are many methods of creating indexes and one should be aware of the different methods, in case they would want to understand the differences in the methods. One of them is the traditional indexing which is the practice of owning a collection of securities in the same ratios as the target index. The synthetic indexing is the use of a combination of equity and low risk bonds. The combination is meant to replicate the performance of a similar investment.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INDEX MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
To ease the tracking movement, there is a software that one can make use of. The software requires little human input and hence, there is minimal interference with the records. This means that index mutual funds therefore require no form of active management and can do well in passive management. This directly translates to lower management fees and lower taxes as well.
Index investments can be bought from many investment managers, some of which include Dow Jones Industrial Average, the Wishire 5000 and the FTSE 100. Other indexes have been personalized by some individual companies in order to be able to develop investment pricing systems. The indexes, whether personalized or captured in a software, should be guided by research which touches on dividends, earnings, book value and sales as well.
There are many methods of creating indexes and one should be aware of the different methods, in case they would want to understand the differences in the methods. One of them is the traditional indexing which is the practice of owning a collection of securities in the same ratios as the target index. The synthetic indexing is the use of a combination of equity and low risk bonds. The combination is meant to replicate the performance of a similar investment.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here INDEX MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Biotech Mutual Funds
Mutual funds come in many packages, all tailored to suit the need of different investors. Biotech mutual funds are a category of these investments, whose major aim is to boost the performance of future technology. They also offer dividends to the investors and other benefits as well. For an investor who may want to invest in these stocks but does not know how to go about it, a little bit of research will go a long way in helping him decide the best way forward.
To begin with, one needs to look out for those investments that have been performing well in the market over the last several years. Do not entirely rely on the performance of the past few years. You can check out for both private (venture capital) and public (NIH) bio-tech investments. They both seem to be doing well over the years and their value increases with time.
You also need to carefully analyze the profit margin on bio-tech drugs. Remember that these are products that are always on demand, thanks to the improved technological advances. The profit margin always tends to be on the higher side because of the simple fact that the drugs are cheap to produce, they have a high demand and are always recession proof. A successful drug can have a profit margin of 20 -30 %. Unlike other types of investments, bio-tech mutual funds have a lower risk factor because testing of the drugs takes about ten years and their probability of not being approved is minimal.
To be able to determine whether an bio-tech investment is worth your time or not, there are a few questions that should act as your guideline. You must first establish whether the drug can treat a disease that previously had no treatment and how large its market is. You must also establish the possibilities for the expansion of the label or patent of that particular drug whose shares you choose to buy.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BIOTECH MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
To begin with, one needs to look out for those investments that have been performing well in the market over the last several years. Do not entirely rely on the performance of the past few years. You can check out for both private (venture capital) and public (NIH) bio-tech investments. They both seem to be doing well over the years and their value increases with time.
You also need to carefully analyze the profit margin on bio-tech drugs. Remember that these are products that are always on demand, thanks to the improved technological advances. The profit margin always tends to be on the higher side because of the simple fact that the drugs are cheap to produce, they have a high demand and are always recession proof. A successful drug can have a profit margin of 20 -30 %. Unlike other types of investments, bio-tech mutual funds have a lower risk factor because testing of the drugs takes about ten years and their probability of not being approved is minimal.
To be able to determine whether an bio-tech investment is worth your time or not, there are a few questions that should act as your guideline. You must first establish whether the drug can treat a disease that previously had no treatment and how large its market is. You must also establish the possibilities for the expansion of the label or patent of that particular drug whose shares you choose to buy.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here BIOTECH MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
How Mutual Fund Rating is Done
The most reliable way to establish or compare the performance of any investment is, to have a look at how it is rated in the stock market or even in the local dailies. Mutual fund ratings are easy to look at and understand. The rating goes a long way in helping an investor determine whether any type of investment he intends to take up is worthy, as a long or short-term investment. In a way, one is able to gauge how risky an investment is.
Mutual fund rating is done through a number of systems, which have all proved to be useful and very reliable. The most commonly used rating system is by the Morningstar. The method is simple and easy to understand. The top 10% investments are given 5 starts, the following 22.5% get 4 stars, the next 35% get 3 stars, the next 22.5% get two and the remaining 10% get just one star. With the stars and the number or investments rated, you are able to determine which ones are more reliable and most preferred.
Mutual fund rating helps an investor to make comparisons on the different categories that there are under these investments. A number of web sites on the Internet will help you find these ratings, they could be from morning-star or other rating systems. The software available for the ratings lets you type in the ticker symbol of the investment you want to check out and then the rating is displayed for you to see. You can check out what the rating on a particular day was.
There are many methods and systems that are used for the ratings, Morningstar system being the most common. Another one is the Lipper Rating System which provides mutual reviews and analysis of data for easier consumer consumption. Lipper System covers more than 80,000 investments and is also based on a scale of one to five, just like the Morningstar rating.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUND RATING If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual fund rating is done through a number of systems, which have all proved to be useful and very reliable. The most commonly used rating system is by the Morningstar. The method is simple and easy to understand. The top 10% investments are given 5 starts, the following 22.5% get 4 stars, the next 35% get 3 stars, the next 22.5% get two and the remaining 10% get just one star. With the stars and the number or investments rated, you are able to determine which ones are more reliable and most preferred.
Mutual fund rating helps an investor to make comparisons on the different categories that there are under these investments. A number of web sites on the Internet will help you find these ratings, they could be from morning-star or other rating systems. The software available for the ratings lets you type in the ticker symbol of the investment you want to check out and then the rating is displayed for you to see. You can check out what the rating on a particular day was.
There are many methods and systems that are used for the ratings, Morningstar system being the most common. Another one is the Lipper Rating System which provides mutual reviews and analysis of data for easier consumer consumption. Lipper System covers more than 80,000 investments and is also based on a scale of one to five, just like the Morningstar rating.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUND RATING If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
These is What You May Need to Know About Mutual Funds
Mutual funds are a type of investment scheme that bring together resources from many different investors, which are then traded in a number of other different securities. The risk involved in these investments is minimized by the fact that, the stocks are not individually, but communally owned. They have a long history and they have been in existence for a long time also. They have proven to be a reliable source of that extra income that everyone is looking for.
Although they were badly affected by the market crash that was experienced in 2009, today, they are among the best performing investments around. After the legalization of the Securities Act in 1993 and the Securities Exchange Act in 1934, the laws have proved very useful in protecting the operations of the investments. The laws disclose useful information about mutual funds, including what the investors and managers are entitled to.
The investments can invest in many other types of securities as well. The most common are cash instruments, stocks and bonds. All these securities are further sub-divided into sub-categories depending on the risk factor, the industry to which the security belongs such as technology or utilities. The securities attract differing rates of returns depending on the regulatory, accounting and tax rules governing them.
In comparison with other types of investments, mutual funds offer an investor several advantages. One of them is that the cost and fees chargeable by the investment manager are shared among all investors that have a stake in that pool of investment. Investors also have a say on the way their money should be handled and the types of securities that should be bought on their behalf. This way, the risk is diversified at the consent of shareholders.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here ABOUT MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Although they were badly affected by the market crash that was experienced in 2009, today, they are among the best performing investments around. After the legalization of the Securities Act in 1993 and the Securities Exchange Act in 1934, the laws have proved very useful in protecting the operations of the investments. The laws disclose useful information about mutual funds, including what the investors and managers are entitled to.
The investments can invest in many other types of securities as well. The most common are cash instruments, stocks and bonds. All these securities are further sub-divided into sub-categories depending on the risk factor, the industry to which the security belongs such as technology or utilities. The securities attract differing rates of returns depending on the regulatory, accounting and tax rules governing them.
In comparison with other types of investments, mutual funds offer an investor several advantages. One of them is that the cost and fees chargeable by the investment manager are shared among all investors that have a stake in that pool of investment. Investors also have a say on the way their money should be handled and the types of securities that should be bought on their behalf. This way, the risk is diversified at the consent of shareholders.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here ABOUT MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
Mutual Funds - Overview of Mutual Funds As a Viable Investment
What is the meaning of the world mutual funds? Mutual funds are the act of collecting funds from a group of investors for the sole purpose of combining those funds for investment in various types of markets. The markets that will be invested in is the responsibility of the mutual fund manager. Fund managers normally have a benchmark that they use as a guide as to the areas they will be investing in.
Compared to other types of popular investments, mutual funds do have a distinct advantage. Diversification. A wide range of investments can be had with a single investment. There is the added benefit of professional supervision as well from the fund manager. Individuals who have neither the time nor the means to invest on their own reap the rewards in this case.
There are some disadvantages to mutual funds which we will touch on now. Over-diversification. Sometimes the opposite is true, not enough diversification is the problem. Also, fund managers have their fees plus commissions should the fund turn a profit. The price and commissions incurred for the best fund managers are usually pretty high as well. And if the mutual fund tanks, they lose nothing but perhaps their reputation and in the worst case scenario, their jobs. Either way, they will not be paying a penny to the fund.
Since you are entrusting your hard earned money to them, there will questions of trust. At the end of the day, who is the fund manager really? Who is this guy telling me how i should invest my money? Is he really qualified? Or is he a stooge hiding behind a fancy suit? After all, they all vary in their performance statistics as well as specialties. They could be great at their specialties but then you lose out on diversification. Consider as well, the speculative nature of the markets. There will always be losses, the idea of the game is to turn a profit more often than you turn a loss. This is true of all investments. As such, there are always risks that you come out with a loss instead of a profit.
In the end, mutual funds are still a great form of investment for those without investment knowledge. The difficulty lies in picking the right fund manager and company. Generally, mutual fund companies that consistently return profits have very high fees and commissions to go along with their performance. In my country, Malaysia, the top dogs are Public Mutual and CIMB and they charge hefty prices for their services. But then again, quality never comes cheap.
Mutual funds and especially Forex Trading are just two types of investments that interest the author to a great extent. Prema Laga has been trading currencies for over 7 years and when she isn't trading on the Forex market, she continually explores the world of online investing and finance.
Article Source: http://EzineArticles.com/?expert=Prema_Laga
Compared to other types of popular investments, mutual funds do have a distinct advantage. Diversification. A wide range of investments can be had with a single investment. There is the added benefit of professional supervision as well from the fund manager. Individuals who have neither the time nor the means to invest on their own reap the rewards in this case.
There are some disadvantages to mutual funds which we will touch on now. Over-diversification. Sometimes the opposite is true, not enough diversification is the problem. Also, fund managers have their fees plus commissions should the fund turn a profit. The price and commissions incurred for the best fund managers are usually pretty high as well. And if the mutual fund tanks, they lose nothing but perhaps their reputation and in the worst case scenario, their jobs. Either way, they will not be paying a penny to the fund.
Since you are entrusting your hard earned money to them, there will questions of trust. At the end of the day, who is the fund manager really? Who is this guy telling me how i should invest my money? Is he really qualified? Or is he a stooge hiding behind a fancy suit? After all, they all vary in their performance statistics as well as specialties. They could be great at their specialties but then you lose out on diversification. Consider as well, the speculative nature of the markets. There will always be losses, the idea of the game is to turn a profit more often than you turn a loss. This is true of all investments. As such, there are always risks that you come out with a loss instead of a profit.
In the end, mutual funds are still a great form of investment for those without investment knowledge. The difficulty lies in picking the right fund manager and company. Generally, mutual fund companies that consistently return profits have very high fees and commissions to go along with their performance. In my country, Malaysia, the top dogs are Public Mutual and CIMB and they charge hefty prices for their services. But then again, quality never comes cheap.
Mutual funds and especially Forex Trading are just two types of investments that interest the author to a great extent. Prema Laga has been trading currencies for over 7 years and when she isn't trading on the Forex market, she continually explores the world of online investing and finance.
Article Source: http://EzineArticles.com/?expert=Prema_Laga
What Influences the Return on a Mutual Fund Investment
Every investor hopes to put his money into an investment scheme with the hope of getting returns out of it. For that reason, the rate of return is among the top factors that one should consider when investing. Mutual funds are a type of investment that are characterized by unique rates of returns. They are popular with many investors because they bring with them some attractive returns, and the investor is not directly involved in their management.
The returns on these investments help one to determine whether the value of the investment has increased or decreased over any given period of time. They are calculated in percentages, and in most cases this is done on an annual basis. Calculation of the percentages is not as hard, and in many instances, the percentage will be given to the investor by the mutual fund manager.
Mutual funds returns are normally calculated on a compound average annual return rate basis. This is to say that in addition to earning a return to your original investment, you also earn a return on the returns themselves. However, the figures take into account any expenses that have been incurred in the process. These include sales commissions, capital gains (or losses) and dividends, all of which are expressed in percentages.
It is worth noting that the returns one gets are greatly influenced by a number of other factors that an investor should carefully analyze before investing. These factors include but are not limited to the funds charges, fees and expenses, taxes that are payable at times, age and size of the fund as well as the risk factors involved. It is only wise for an investor to carefully look at these factors and how they will positively or negatively affect the returns.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS RETURNS. If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The returns on these investments help one to determine whether the value of the investment has increased or decreased over any given period of time. They are calculated in percentages, and in most cases this is done on an annual basis. Calculation of the percentages is not as hard, and in many instances, the percentage will be given to the investor by the mutual fund manager.
Mutual funds returns are normally calculated on a compound average annual return rate basis. This is to say that in addition to earning a return to your original investment, you also earn a return on the returns themselves. However, the figures take into account any expenses that have been incurred in the process. These include sales commissions, capital gains (or losses) and dividends, all of which are expressed in percentages.
It is worth noting that the returns one gets are greatly influenced by a number of other factors that an investor should carefully analyze before investing. These factors include but are not limited to the funds charges, fees and expenses, taxes that are payable at times, age and size of the fund as well as the risk factors involved. It is only wise for an investor to carefully look at these factors and how they will positively or negatively affect the returns.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS RETURNS. If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS.
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
This is the Mutual Fund Definition
Mutual funds are a type of investment that brings together many investors into a common pool. The money collected in the pool is invested in other types of assets and securities like stocks, bonds and other money market instruments. The pool is professional managed by a fund manager who is in charge of looking out for the best type of securities in which to invest the investors money.
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
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
Ways You Can Make Money Out of Mutual Funds
If you do not have the time and the professionalism to invest your money, and you think that handling it by yourself is too risky, then you can invest in mutual funds. Mutual funds are a portfolio of stocks, bonds, assets and money market instruments contributed by various investors and held together in an investment pool for the sole purpose of making money. This pool is supervised and monitored by a group professional investment adviser. These managers will make sure that the cash flow of the fund is one that will make profits for its investors.
The increase in price of fund holdings is dependent on the strategies employed by the fund investment adviser. Once the prices increase, the investors make money by selling the high valued shares. You will find, in most cases, fund managers will not disclose the nature of bonds or stocks they have invested in. They will generally release these results on a quarterly or half yearly basis in order to shield the investors from unfair competition and price hikes. This lack of information gives some managers unfair advantage over their investors.
Mutual funds investors also gain through dividends on stock. This happens when a company experiences less liquidity or when they wish to reduce the price of their shares. When the number of shares increase in the market, the prices tends to go down. This prompts more investors to invest in the less valued stock since they are able to buy them. Mutual fund managers could also choose to make money through interest on bonds, where investors agree to give loans to the government or companies that have a lower risk of default at a predetermined rate of interest.
As a mutual funds investor, you could also expect to make money through capital gain. This happens when the fund invested increases in value when sold. Profits made from a long term investment are usually taxed less than those made on a short term fund. There are two types of capital gains:- realized and unrealized capital gain. The former referring to a stock that has already been sold at a profit, while the later refers to a stock that has yet to be sold, but has a potential to make profits if it would be sold.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu
The increase in price of fund holdings is dependent on the strategies employed by the fund investment adviser. Once the prices increase, the investors make money by selling the high valued shares. You will find, in most cases, fund managers will not disclose the nature of bonds or stocks they have invested in. They will generally release these results on a quarterly or half yearly basis in order to shield the investors from unfair competition and price hikes. This lack of information gives some managers unfair advantage over their investors.
Mutual funds investors also gain through dividends on stock. This happens when a company experiences less liquidity or when they wish to reduce the price of their shares. When the number of shares increase in the market, the prices tends to go down. This prompts more investors to invest in the less valued stock since they are able to buy them. Mutual fund managers could also choose to make money through interest on bonds, where investors agree to give loans to the government or companies that have a lower risk of default at a predetermined rate of interest.
As a mutual funds investor, you could also expect to make money through capital gain. This happens when the fund invested increases in value when sold. Profits made from a long term investment are usually taxed less than those made on a short term fund. There are two types of capital gains:- realized and unrealized capital gain. The former referring to a stock that has already been sold at a profit, while the later refers to a stock that has yet to be sold, but has a potential to make profits if it would be sold.
Peter Gitundu Creates Interesting And Thought Provoking Content on Mutual Funds. For More Information, Read More Of His Articles Here MUTUAL FUNDS If You Enjoyed This Article, Make Sure You Read My Most Recent Posts Here MUTUAL FUNDS
Article Source: http://EzineArticles.com/?expert=Peter_Gitundu