Best Performing Mutual Funds

How to Invest in Mutual Funds

2009-05-29T01:28:00.000-07:00

If you are into investments but you don't want to invest in one kind of stock or another, perhaps you would rather invest in a mutual fund. With mutual funds you can diversify, meaning you can buy more than one kind of stock. By diversifying you reduce the risks without losing your returns.

When you work with mutual funds you can manage them better. You normally don't buy mutual funds directly. Instead you hire a professional manager to care for your purchase. These managers know how to care for the fund and have credentials to prove it.

Buy having mutual funds you can keep track of them easier. This is because you only have one portfolio to deal with instead of perhaps hundreds of stocks. And if you need money quickly, you can go with mutual funds because they are very liquid.

Mutual funds also cost less. You don't have to spend a lot of money to purchase them like you may have to with a single stock purchase. Plus, you can invest small amounts at any time with no trading costs.

If you have decided to invest in a mutual fund, there is one problem. There are well over 10,000 funds available so which one to go with. Before you actually invest in a mutual fund get a prospectus from the company. The prospectus will tell you about the fund including the fund's goals and how the goals will be achieved, along with a chart of past performance and fees.

Before you invest in a fund, look at the fees the company charges. You will notice these fees in the prospectus. If you are ambitious, you will be able to find the fee structure online. Always go with a fund that has a low expense ratio and stay away from 12b-fees.

Another thing to keep in mind is not to buy loaded funds. These are funds that have sales charges attached to them. If you purchase these types of finds, you will be paying sales charges on top of other fees.

Don't forget to overlook the mutual fund's risk factor. If the fund looks to unstable over the years, or shows signs of it being too risky, don't get involved. And also check with the SEC to make sure the company is decent and has a good reputation.

When buying mutual funds you will have various types of choose from. There are money market funds, municipal bond funds, corporate bond funds, mortgage-backed securities funds, U.S. Government bond funds, stock funds, and index funds.

Mutual funds are no doubt the best way to invest. Just study the market and understand your options. If you do your research, you will be able to pick a fund that will benefit you in the long run. Investigate the company and know what you are getting into. Don't leap before you look first. You may end up getting less than what you bargained for it you do.

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What Are Mutual Funds?

2009-04-24T23:46:00.000-07:00

Mutual funds are very popular. In fact, they are the one of the most popular investments on the market today. What does that mean in numbers? There are over 10,000 different funds with over $4 trillion in investments!!

Why are they so popular? For some, it is because of their great returns. Others like funds because they are easy to buy and sell. Still others like them because they are diversified and less risky.

A mutual fund raises money from investors to invest in stocks, bonds, and other securities. It is a package made up of several individual investments. When those investments gain or lose value, you gain or lose as well. When they pay dividends, you get a share of them. Mutual funds also offer professional management and diversification. They do much of your investing work for you.

Mutual funds have been around since the 1800's, but didn't become what we know today until 1924. Even then, they did not become a household word until the 1990's, at which time the number of people owning them tripled. A recent survey shows that 88% of all investors have at least some of their money in mutual funds.

A mutual fund is a special type of company that pools together money from many investors and invests it on behalf of the group, in accordance with a stated set of objectives. Mutual funds raise the money by selling shares of the fund to the public, much like any other company can sell stock in itself to the public. Funds then take the money they receive from the sale of their shares (along with any money made from previous investments) and use it to purchase various investment vehicles, such as stocks, bonds, and money market instruments.

In return for the money they give to the fund when purchasing shares, shareholders receive an equity position in the fund and, in effect, in each of its underlying securities. For most mutual funds, shareholders are free to sell their shares at any time, although the price of a share in a mutual fund will fluctuate daily, depending upon the performance of the securities held by the fund.

Most investors pick mutual funds based on recent fund performance, the suggestion of a friend, and/or the praise bestowed on them by a financial magazine or fund-rating agency. While using these methods can lead one to selecting a quality fund, they can also lead you in the wrong direction and wondering what happened to that "great pick."

Despite the distinctive characteristics of mutual funds - performance, management philosophy, & investment objectives - your specific selections should be chosen within the context of your overall financial plan. Examining features such as past performance are not where your studies should begin. The point of departure is you; your financial priorities; your resources; your approach to investment diversification; your willingness (or lack thereof) to accept market volatility; and your time horizon for a particular investment.

Total Returns are fun to look at and brag about, but simply looking at a fund's total return for the past year is not necessarily a good measure of a fund's quality. For example, investors often talk about how well a specific fund did last year and how happy they are with that performance -- say a 16% return in an equity income fund. Well, in a given year that may or may not have been a good return for an equity income fund. That fund may have under-performed many or most other equity-income funds for the year. Returns should always be measured in context with how other similar "categorized" (e.g.. equity income funds, growth funds, small cap funds, etc.) funds have performed. So don't get overly excited by a funds total return until you see how it compares to other similar funds over the same period.

As it is often said, past performance can't predict future results. But when comparing performance of funds, it is also wise to look beyond the results of one or two years. Most experts suggest that a larger "window" of 5 to 10 years gives a clearer picture of historical performance. Has your fund or the one you are considering performed well over this longer time horizon? Any fund can have one good or one bad year, but if you are investing for the long term, you want a fund that has a consistent track record. While that record doesn't guarantee future results, it gives you an indicator that may be to your advantage.

Michael Saville has over twenty five years experience in providing finance and investment advice. He has written a free five-part short course on 'no load mutual funds' which is available at http:///buy-mutual-funds.com.

Mutual Funds - A Secure Investment

2009-04-14T22:39:00.000-07:00

Mutual funds are a collection of stocks and/or bonds invested in different securities, which include fixed market securities and money market instrumentals. It facilitates investors to put their money under an efficient investment management. There are three types of mutual funds namely, income funds, growth funds, and balanced funds.

The basic principle underlying mutual funds is to pool in money with other people to convert it into funds. Mutual funds generally buy shares in stocks wherein an experienced fund manager performs the task of selecting, purchasing and selling off the stocks himself. Certificates are then issued to the shareholders as a testimony of proof of their partnership and participation in the emoluments of funds.

There are particularly three ways in which you can make money from a mutual fund. They are:

1. Benefits can be earned from the commission on stocks, and interests on bonds. All the income received all round the year is paid by the funds in the form of a distribution.
2. The fund will have an outstanding benefit provided the funds sell high priced securities. Most of the profits are given back to the investors in a distribution.
3. The value of the fund’s share automatically increases with an increase in the value of unsold high priced fund holdings. Accordingly, you can always sell shares of your mutual fund for profits.

Many people find investing in mutual funds an attractive option to that of dealing directly with the stock market because it is comparatively safe. In fact, these days, mutual funds have become the first preference of many investors. Mutual funds provide a balanced and better approach compared to conventional stock market alternatives. It has an added advantage of investing in several distinct sectors and firms, so, if one company suffers losses, the others may be rising. Investing in mutual funds, therefore, minimizes the loss-bearing risk of monetary assets.

In a nutshell, here are the salient points of the advantages of mutual funds:

1. Cost-effectiveness of investing in mutual funds: The main advantage of investing in mutual funds is the efficient management of your finances. Investors buy funds because they lack the competence and time to manage their own portfolio. It is a cost effective method, especially for a small investor because it is expensive to get a manager to manage individual investments.

2. Diversification: Compared to individual stocks or bonds, mutual funds diversify the risk of bearing loss. The basic intention being to invest in a diverse number of assets in order to overcome the negatives of loss making stocks or bonds by the profits reaped by others.

3. Economy of Scale: The transaction expenses are relatively low as a mutual fund is bought and sold in large amounts of credits.

4. Liquidity: Mutual funds provide the opportunity of converting shares into cash at any point of time.

5. Simplicity: It is easy to buy a mutual fund. Most companies have their own automatic purchase plans, and the minimum investment rates are very small.

Therefore, investing in mutual funds is certainly a secure investment as the chance of loss is spread out, and the opportunity for gains are numerous. At the same time, it is both cost-effective and an investment that gives great future returns.

The days of depending on government largesse in meeting old age financial requirements are growing dimmer by the day. Hence, investing in mutual funds can be a wise choice, especially for those who plan for an early retirement and hope to enjoy a secure senior citizenship.

Joe Kenny writes for the UK Loans Store offering UK secured loans and offer more information on UK bad credit loans and other loan topics available on site.
Visit Today: http://www.ukpersonalloanstore.co.uk.

How (NOT) to Buy Mutual Funds

2009-04-02T05:33:00.000-07:00

When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. I hope my sharing it with you will help you avoid making the same devastating financial mistake one of my former clients made.

This story begins during the height of the investment madness in 2000, just prior to the bear market. I had been managing an IRA account for "Bob" for around six years, with a better than average record of success. So I was surprised when Bob sheepishly called in July, 2000 to let me know he was transferring his IRA account, which had done particularly well during our latest Buy cycle going into the year 2000.

However, his tax preparer, a long time personal friend of Bob's wife’s, was now also offering investment services, having recently received his Registered Representative’s license.

Fast forward to the end of September. It had become increasingly clear to me that the Bull market had run its course. So, in accordance with the Sell signal from our trend tracking methodology, we sold all of our mutual fund positions on October 13, 2000 and went 100% into money market. (See my article “How we eluded the Bear in 2000” at http://www.successful-investment.com/articles12.htm). From our safe haven we watched the market crash and burn, causing most other investors to sustain double digit losses eventually reaching as high as 50 - 60% of their assets.

In 2002 Bob unexpectedly stopped by my office. As it turned out, things had not gone well at all with his IRA investments. As most advisors would have done, his tax preparer/advisor had quickly moved all of Bob’s assets into a variety of “load funds.”

Of course, being newly licensed he was clueless (as were many licensed advisors) as to market behavior or analysis of any kind. The end result was that Bob’s portfolio lost in excess of 50% over the next 2 years. (Not to gloat, but my clients' losses in the same period were non-existent.)

Unfortunately, the degree of loss Bob sustained was experienced by many investors who did not follow a disciplined and methodical approach.

What I find particularly distasteful is that Bob's tax preparer misused his position of trust. He made financial decisions that he was not qualified to make, though his license implied that he did know enough to make them. So now we know what a piece of paper is worth.

This is no different than letting a newly graduated medical student with a fresh MD behind his name perform heart surgery. Or, hiring a new MBA grad to Chief Financial Officer of a Fortune 500 company. Yet the financial services industry allows someone to get a license (after a fairly short course) and to immediately start making incredibly important and far reaching financial decisions for anyone he or she can sell their service to.

This is a worrisome trend in this industry. A CPA friend confirmed that he has been approached many times by firms wanting him to offer investment services.

Why? It’s easy money! Accountants and tax professionals have a great business base. They are in a unique position of trust, because of the information their clients disclose to them. Whether they are employed by a company or they maintain an individual practice, there is probably no other person (other than your spouse) who knows as many intimate details of your financial life as your accountant/tax preparer.

To abuse this trust for personal gain—no matter how noble the motive may appear—is a total conflict of interest and a huge betrayal.

The bear market of 2000 has shown that investing must be a disciplined endeavor. Even most professionals have failed to recognize this. What busy accountant, in the middle of tax season, can put the necessary time and attention to a volatile investment market that may require action at a moment's notice?

As for Bob, he’s still with his accountant, and in the same investments that brought his portfolio down. He’s hoping for a miracle recovery. As of this writing, the stock market is engaged in something of an upswing and Bob, I'm sure, is getting his hopes up that he will recover some of his losses. However, I shudder to think that this rally may come to an end and the bear market resumes. Where will Bob be then?

At 58 years old Bob is still playing Russian roulette with his retirement. He's apparently unable to make a decision to move to someone who has the ability to make sense of market trends and the discipline to follow the signals they communicate. This is a decision that will have a profound affect on his financial future—and will determine whether his story has a happy or sad ending.

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless of people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; ulli@successful-investment.com

Going Global through Mutual Funds

2009-03-26T01:39:00.000-07:00

There are more than 13500 different publicly traded companies in the world today, and there are over 700 more companies expected to go public within a year. In addition, every major developed country offers investors various bonds to invest in. All of this makes for a lot of different investments and plenty of choice. Investors can take advantage of this choice through a good global balanced fund that invests in bonds and stocks or a global equity fund that invests in stocks all around the world.

A global equity fund invests in stock markets around the world. These funds will have a portion of their investments invested in North America. Europe, and Asia. Some of these funds will own hundreds of securities in order to participate in the growth prospects of many firms while diversifying the risk associated with investing in different companies. A good global equity fund will be a foundation for a well-diversified mutual fund portfolio for almost any investor. Investors could consider including the AGF International Value Fund, the BPI Global Equity Fund, or the Fidelity International Portfolio Fund in their portfolios.

A global balanced fund is a fund that invests in both stock and bond markets around the world. These funds will also always have a portion of their investments invested in stock and bond markets located in North America, Europe, and Asia. They are more conservative than global equity funds because they invest in a combination of stocks and bonds, which affect the fund's performance. Over the long term these funds will provide a lower rate of return for investors but they will also exhibit a lot less risk than a global equity fund. They exhibit less risk because bonds are less volatile than stocks; they do not decline in value to the same magnitude or at the same time as global equity funds. A conservative investor should find a good global balanced fund that will serve as a good foundation for a diversified portfolio.

Tony Reed is the author of "Going global through mutual funds", please visit his website Mutual Funds & Stock Trading for more information.

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What are No-load Mutual Funds?

2009-03-20T03:20:00.000-07:00

No load mutual funds are mutual funds whose shares are sold without a commission or sales charge. The reason for this is that the shares are distributed directly by the investment company, instead of going through a secondary party. This is the opposite of a load fund, which charges a commission upon the initial purchase at the time of sale.

Since there is no cost for you to enter a no-load fund, all of your money is working for you. If you purchase $10,000 worth of a no-load mutual fund, all $10,000 will be invested into the fund. On the other hand, if you buy a load fund that charges a commission of 5% upon purchase, the amount actually invested in the fund is $9,500. If both funds return 10%, the no-load fund would have grown to $11,000 while the loaded fund only rose to $10,450.

The major idea behind a load fund is that you will make up what you paid in commissions with the solid returns that the managers will provide. However, most studies show that loads don't outperform no-loads.

Most load mutual funds are sold through brokerage houses, financial planners, and people known as "Registered Representatives." With very few exceptions, most of these people operate on the basis of selling as many fund shares as possible. Their commissions are collected up front, as a back end charge, or both. Whether you make money or lose it isn't their primary concern. What matters most to these folks is how often you buy (and generate new commissions for them).

No load funds have traditionally been marketed directly by the mutual fund companies themselves. But today, more and more funds are being offered through discount houses like Fidelity, Schwab, and a host of others. The advantage to this is that you have an unlimited choice of mutual funds in one place. You don't have to open a separate account for each mutual fund family that you purchase.

Most fee based investment advisors have independent relationships with the major discount firms. They're able to offer clients just about any no load mutual fund that is available. They receive no commissions from the firm and only get paid by the client according to a pre-determined fee arrangement. Under this type of arrangement, there's no hidden agenda to try to sell you a particular mutual fund in order to earn a larger commission.

It is best to stick with no-load or low-load funds, but they are becoming more difficult to distinguish from heavily loaded funds. The use of high front-end loads has declined, and funds are now turning to other kinds of charges. Some mutual funds sold by brokerage firms, for example, have lowered their front-end loads to 5%, and others have introduced back-end loads (deferred sales charges), which are sales commissions paid when exiting the fund. In both instances, the load is often accompanied by annual charges.

On the other hand, some no-load funds have found that to compete, they must market themselves much more aggressively. To do so, they have introduced charges of their own.

The result has been the introduction of low loads, redemption fees, and annual charges. Low loads--up to 3%--are sometimes added instead of the annual charges. In addition, some funds have instituted a charge for investing or withdrawing money.

Redemption fees work like back-end loads: You pay a percentage of the value of your fund when you get out. Loads are on the amount you have invested, while redemption fees are calculated against the value of your fund assets. Some funds have sliding scale redemption fees, so that the longer you remain invested, the lower the charge when you leave. Some funds use redemption fees to discourage short-term trading, a policy that is designed to protect longer-term investors. These funds usually have redemption fees that disappear after six months.

Probably the most confusing charge is the annual charge, the 12b-1 plan. The adoption of a 12b-1 plan by a fund permits the adviser to use fund assets to pay for distribution costs, including advertising, distribution of fund literature such as prospectuses and annual reports, and sales commissions paid to brokers. Some funds use 12b-1 plans as masked load charges: They levy very high rates on the fund and use the money to pay brokers to sell the fund. Since the charge is annual and based on the value of the investment, this can result in a total cost to a long-term investor that exceeds a high up-front sales load. A fee table is required in all prospectuses to clarify the impact of a 12b-1 plan and other charges.

The fee table makes the comparison of total expenses among funds easier. Selecting a fund based solely on expenses, including loads and charges, will not give you optimal results, but avoiding funds with high expenses and unnecessary charges is important for long-term performance.

Mutual Funds and Their Risks

2009-03-17T23:55:00.000-07:00

Investing in mutual funds is a relatively safe way of growing your net worth, but such investments are not entirely free of risks. Before you pick on any particular mutual fund for investment you should watch out for a few things.

Performance

The first thing you should look for is whether the mutual fund you are planning to invest in is outperforming or under-performing with respect to the market. Good and safe mutual funds are those that consistently outperform the market. Changes in the net asset values (NAVs) of such mutual funds are consistently one step ahead of the market. For example, if the index that measures market movements goes up, the NAV of most good and safe mutual funds will also move up at least as much as the market or even more than the market. On the other hand, when the market moves southwards, the NAV of most good and safe mutual funds will move down but such depreciation will be less than or at the most equal to the market’s downward movement. Unsafe or risky mutual funds are those where the opposite occurs – when the market moves up, the NAV of risky or unsafe mutual funds may move up less than the market and may even move down despite a bull run in the market. Such under-performing mutual funds should always be eschewed when taking an investment decision.

Churn and earn

The next thing to watch out for is whether the mutual fund is undergoing too much “churn and earn”. This means you have to check whether too many transactions by the mutual fund are resulting in higher fees or costs to the investor. In this context, the worst offenders are those mutual funds that have a lot of spurious churn. Every time a mutual fund buys or sells stocks, the broker or brokers it employs make a neat pile from the commissions. So, these brokers try to encourage a lot of churn or buying and selling of stocks by giving a kickback to the mutual fund manager. Although direct bribery is illegal, payment of soft money through a sponsored trip to Hawaii or letting the mutual fund manager have a swanky Wall Street office for $1 a month is not. The only loser in all this spurious churn is the investor, especially in cases where the small print says that the investor will have to pay the brokers’ fees as well.

Lack of clarity

Mutual Funds that have prospectus, annual reports or statements of additional information written in such a way that they are difficult to understand should also be avoided. The lack of clarity in their documents is almost a sure sign of lack of honesty in their dealings or a lack of competency in managing funds – both of which are strong reasons for avoiding them for investment purposes.

Risky and unsafe mutual funds are also characterised by having too many restrictions on how and when investors can sell or redeem their mutual fund shares. Mutual funds that have too long lock-in periods or those which slap a hefty exit load at the time of redemption should be eyed with suspicion and are likely to prove to be unsafe and risky.

Beware of scams

Finally, there are mutual funds that are outright scams. There have been reports of fund mangers selling stocks at prices other than what has been reported to the investor. For example, the fund manager may have sold stock at prices that prevailed before closing of the day’s trade although the investor is told that the transaction took place at closing prices which were lower. The manager then pockets the difference and with most such transactions involving large volumes, even a fractional price difference can lead to substantial gains for the manger. Again the only loser in all this is the investor who gets short-changed by the mutual fund operator!

Jason Hanson recommends you contact the Law Firm of Richardson, Patrick, Westbrook, and Brickman if you need a mutual funds attorney.

Mutual Funds are not Investments

2009-03-10T05:04:00.000-07:00

Mutual funds simply are a method through which people invest. People often asking, "What are mutual funds paying?" The truth is that mutual funds don't pay anything! People also say, "I don't like mutual funds because they're risky." But there's no such thing as a "risky" fund. Nor has anyone ever lost money in a mutual fund. Mutual funds are not good, and they're not bad.

A mutual fund, in fact, is merely a mirror - a reflection of something else. Thus, if you invest in a mutual fund that invests in stocks, and you are as likely to make money or lose money as any other person who invests in stocks.

In fact, you can use mutual funds to buy virtually any kind of investment: stocks, bonds, government securities, real estate, gold and other precious metals, international securities, foreign currencies, natural resources, even hedge positions and money markets. You can find funds that engage in virtually any type of trading activity, including options and futures contracts, derivatives, and even selling short.

Technically, mutual funds are called "open-end" investment companies because they forever buy and sell their shares. In industry jargon, mutual funds "sell" shares to the public, and when you want your money back, the fund will "redeem" them for you.

Tony Reed is the author of " Mutual funds are not investments", please visit his website Mutual Funds & Stock Trading for more information.

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Facts about Mutual Funds

2009-03-02T04:31:00.000-08:00

Ok......., today we are going to talk about something most readers are concerned about. If I have extra money, where should I put my money? Mutual fund or unit trusts is always a popular option among beginners.

What is actually mutual fund? American uses mutual fund but a lot of Asian countries such as Malaysia and Singapore, our people here call it unit trusts.

Actually the concept is simple, a co-operation or company with a few what they claim themselves as " expert investors" set up a fund where you put your hard earned money, they promise they would invest these monies for you in stock market, bond , property or even money market. They are supposed to help you to earn extra money and the returns they get are management fees and transaction fees. A lot of laymen like you and me are very interested to invest but we just do not have the time to follow the stock market and we hardly have any idea which stock to buy since that your country may have one thousand and one hundred stocks available. So these people provide you a better choice, they would help you to monitor the market and they claim that they can do better than the average stocks returns.

These people whom they call themselves as fund managers are usually equipped with a degree in business or commerce. They have vast experience in investment. You may wandering, since that they know how to invest, why they are willing to share this trick with other layman investors like you and me? The answer is simple, by 'helping' you to invest, their income in guaranteed regardless of the market performance.

Why this thing is happening? Because we are paying them for the services. If you read through the prospectus carefully, they would state that no matter they are making money for you or not, every time you are buying the units, you have to pay up to 5-6.5% more the unit actual net asset value ( NAV). ( Malaysian Unit trusts figures). For an example, if there are 1000 units in a fund and these units worth RM1000, NAV of one unit is RM1, but they are selling to you at RM1.05 ( 5% higher). Besides making money like this,at the end of every financial year, they charge you managers' fees which can be up to 3% of the total NAV of units available. So are you surprised with the news that 80% of Malaysian who used their EPF money (compulsory retirement plan in Malaysia for workers, similar to 401k plan in US) to invest in unit trusts actually lost their money.

Now, you understand why all the bankers are making money every year regardless of the market. Can you imagine that you have entrusted your money to your 'friends' and hoping that they help you to get some returns and at the end of the day, they lose half of your money and the worst part, they are asking you to pay them some more because you are using their ' intelligence' to ' lose' your money in stock market/ bonds!

However, if you are lazy people and refuse to learn new thing, mutual fund is the ideal place for you to put money in long run. But I am always cautious about mutual fund, maybe there are a lot fund managers making money for you ( and making even more money for themselves) , there are also huge numbers of fund managers who do not make money for you! ( but they are still making money for themselves!)

When I stared my work about 4 years ago, I invested RM1000 after saving for 3 months( about US280) in one of the newly launched unit trust in Malaysia. After 4 years of waiting, they never announced any distribution ( dividend ) to me and the worst part is my investment is worth RM950 only nowa day ( plus 3-3.5% of inflation per year in Malaysia, I actually lost about 15% in that unit trusts in 4 years!). Recently I received their financial report about the fund, actually, they lost RM 32 million in previous year but we as unit trust holders still have to pay RM 3.2 million to the fund managers for their service!

If you are approached by an agent who promises one thousand and one things and tell you how good their mutual fund is, always remember my advice, read properly their prospectus and if possible, invest yourself rather than giving your money to them for them to help you to invest!

There are usually 3 types of mutual funds available in the market, high, intermediate ( medium) and low risk. A high risk mutual fund is a fund where the fund managers would put your money( remember 'your money' not their money')in investment vehicles such as stock market, hoping for higher returns. A medium risk mutual fund is a fund with mixed portfolios ( a combination of stocks and bonds) and usually they pay you certain income every year. A low risk mutual fund is a fund where all your money would be put in investment vehicles that pay you fixed income such as government bonds). You must remember that the agent always tell your that you need to ascertain your risk tolerance before deciding which type of mutual fund to buy because all these funds carry certain risk to your money. ( I always think that I am the one who takes out my money to invest and I have to carry some risks, the fund managers and the company never spend a cent to invest and they have "no risk", don't you think it is funny?)

More at www.young-investors.blogspot.com

Stocks versus Mutual Funds

2009-02-17T05:16:00.000-08:00

The major part of a mutual fund is a portfolio of a wide range of stocks that are managed on behalf of the investors that buy into the fund. Mutual funds were created to give small investors to take advantage of a large, diversified portfolio without the need of large investments. The major advantage of a diversified portfolio is the increased protection against rapid market fluctuations of any one particular stock.

As mutual funds' portfolios are spread across 20 or more stocks, even if one of those stocks falls, the effect is much less than if the portfolio consisted of that one stock only. The main rule of investing is “diversify whenever it is possible”. Of course, it is a problem for small investors - they often lack the funds to buy a wide variety of stocks. And that's where mutual funds comes in, letting small investors to benefit from diversification only after investing a small amount of money.

Mutual funds can be made up of a variety of holdings, not only the stocks. Their portfolios might include also bonds or other money market instruments. Technically speaking, a mutual fund is a company and those who buy into it are in fact purchasing shares of that company. They can be bought either directly from the fund itself or from brokers acting on behalf of the fund. How do we redeem shares? That's simple – we sell them back to the fund (they have to buy them).

Most funds are run by investment professionals and analysts who decide which securities to include in the fund. However, there are also some non-managed funds, usually based on an index such as the S&P 500 or Dow Jones. Such funds simply duplicate the holdings of the index, so there is no need for analyses.

How do they work? For example, if the Dow Jones goes up by 5%, the mutual fund based on that index will also rise by 5%. Surprisingly, non-managed funds usually perform better than their managed counterparts.

So far so good, but there are also a few downsides. First, there are fees that must be paid regardless of how the fund performs. Then, the individual investor has nothing to say about which securities should be included in the fund. Lastly, the current value of a mutual fund remains unknown until it publishes its financial statement (twice a year).

Mutual funds are a good choice for the smaller or part-time investors, better than either stocks or bonds. For one, they provide investors with the diversity that lessen the shock caused by sudden stock market movements while usually outperforming bonds. Of course, it is possible for a mutual funds to lose value, though mainly in the short term. Investors interested in short-term transactions should rather turn their attention to bonds which offer a set rate of return.

Money market funds, bond funds and stock funds are three main types of mutual funds currently on market. Money market funds offer the lowest risk, but also the lowest return rate. Their portfolios consist only of high quality investments – for example, bonds issued by the US government and blue chip corporations.

Bond funds usually produce higher profit than money market funds, but they are also a little more risky. The reason is simple: all the risks associated with bonds – bankruptcy or falling interest rates – can also damage bond funds.

Stock funds are mutual funds with the greatest potential, but also carry the most risk. However, they are dangerous mostly for the short-term holders – stocks usually outperform other investments in the long run. There are two main types of stock funds - 'growth funds' that aim to maximize the gain and 'income funds' that concentrate on stocks that pay regular dividends.

Mutual funds are ideal investment instruments for everyone with limited funds or none investment experience. The choice between the funds is a decision on how much risk you want to take against the expected return rate.

To find out more about learn stock investing and stock trading strategies visit http://www.learn-stock-investing.info

Stocks versus Mutual Funds

2009-02-14T01:04:00.000-08:00

The major part of a mutual fund is a portfolio of a wide range of stocks that are managed on behalf of the investors that buy into the fund. Mutual funds were created to give small investors to take advantage of a large, divers may have wondered why your mutual funds have been going down for the past 2 years. The answer is very simple, but not one you will hear from Wall Street as they want you to send money.

In order for stock mutual funds to go up you must have a bull market. Unfortunately, that bull ended 2 years ago and is probably not going to return for a long time. Yes, there will be short-term rallies that can last from weeks to months, but the downward spiral will continue. For the past 100 years the Price/Earnings ratio of the S&P500 index has a mean average of about 15. With the current P/E running about 41 the rubber band has been stretched too far and is now contracting toward a more realistic level. It will take a time, probably several years, for a true bottom to be reached.

Mutual fund charters require the fund manager to be fully invested at all times. The fund may be required to be invested in tech stocks, pharmaceuticals, automotive, Asia or some other specific category. If that particular sector is weak and almost all stocks therein are headed down the fund manager has nothing to buy and is not allowed to sell to put the money in cash or bonds to protect the investors. Some are allowed to buy and sell what they wish; others must invest in stocks of a particular index such as the Dow Jones, S&P 500 or the Nasdaq. Most of the fund managers today are too young to have experienced a bear market and do not know how or what to do.

The small investor today has been taught to believe that the stock market always goes up. From 1982 to 2000 it did, but that was the end. All the talking heads on radio and TV have been telling you to buy the breaks and that the market always comes back - except when it doesn't. Almost none of them has ever seen or even studied a major bear market. The last one was 1973-74 just about the time most of these guys were in grade school or high school. They haven't a clue and don't know when or how to sell.

Today there are trillions of dollars in 401Ks, IRAs, pension plans, etc. run by professional fund managers, financial planners, bankers, etc. who have no idea how to protect their investors. More trillions are getting ready to go down the drain. Last year 90% of stock mutual funds lost money. The Grim Reaper is now the manager of your mutual fund.

For the little guy, that's you, there is only one way to protect your money. If you are in one of those plans you can tell them you want to have your funds in a money market account. At least it won't go down. If there are any fixed income or bond funds available to your account that is another safe venue.

Mutual funds are no longer a good long-term investment. The age of the stock mutual fund is over. Dead. Don't let your hard-earned money get away.

Al Thomas' best selling book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter to receive his market letter for 3 months at www.mutualfundmagic.com to discover why he's the man that Wall Street does not want you to know.

Comments to al@mutualfundmagic.com

Mutual Funds are Dead

2009-02-11T01:32:00.000-08:00

You may have wondered why your mutual funds have been going down for the past 2 years. The answer is very simple, but not one you will hear from Wall Street as they want you to send money.

Mutual funds are no longer a good long-term investment. The age of the stock mutual fund is over. Dead. Don't let your hard-earned money get away.

Comments to al@mutualfundmagic.com

Investing in Mutual Funds Online

2009-02-06T04:59:00.000-08:00

Are you thinking of investing some money? There are thousands of different mutual funds that you can start investing your money in, but the question is how do you pick the best one to fit what you are looking for? Or maybe you’re wondering if investing in mutual funds online is the right thing for you to do.

When you are setting up an account over the internet with your online broker, you must first meet three important requirements. Your computer must be able to connect to the internet, your web browser must be at least 128-bit compatible such as Netscape 3.0 or Internet Explorer 3.0 or higher, and you must have at least a small amount of money if not more to start. Some online brokers require that you have as much as $1,000 or the equivalent in securities to open an account.

When investing in mutual funds, you should check around for different accounts that may be available. Some require you to place cash up front and others may not require any cash to open the account. You should do an extensive detailed search to find an account that fits your needs as well as your bank account. Your best research tool is the World Wide Web and it is right at your finger tips 24 hours a day, seven days a week.

Investing in mutual funds online are always subject fees and this can be a tricky subject. Brokers charge fees and these can widely differ depending on the broker you choose to go with. Always read the fine print with anything dealing with money exchanging hands. There could be hidden fees or fees for changing funds that are within the same fund family. Some brokers don’t charge any fees and these may be the ones you should look into. There are websites like http://www.globefund.com that can provide you with daily, monthly and historical mutual fund data. You can also view the performance charts of a particular fund and compare funds against each other. This is an easy way to find the one that is best for you.

James Hunt has spent 15 years as a professional writer and researcher covering stories that cover a whole spectrum of interest. Read more at http://www.best-for-mutual-funds.info

Money Market Mutual Funds

2009-02-03T00:19:00.000-08:00

“I don't want to be left behind. In fact, I want to be here before the action starts.” -Kerry Packer

Money market mutual funds are a great alternative, for the less affluent investors, to Treasury bills and certificates of deposits. This is because money market mutual funds require less money to be paid out up front. Treasury bills often require thousands of dollars to begin investing. Money market mutual funds are extremely popular, due in part because of their liquidity. This type of fund acts much like a savings account.

Future investors can allow their money to accumulate in a money market mutual fund until there is enough money available to invest in stocks, bonds, and regular mutual funds. Money market funds can be seen a building block for a new investor on his way to creating an investment portfolio. An investor can easily place more money into this fund or remove money when it is needed. There is no paperwork, additional fees, or commissions to a financial advisor.

Money market mutual funds are a great place to rollover investments while trying to decide on your next financial move. For example, if you have stock in a company that is going belly up and you decide to sell, you can place your money in this type of mutual fund until you decide what you will ultimately do with profits.

Another great benefit is that money market mutual funds have a higher rate of interest then a normal savings account. A normal savings account may have a rate of return that is well under 1% however, money markets have an average interest rate of 4.5%. Over a couple of years time, this can create a nice profit to pay for a vacation or to reinvest.

Traditional money market accounts usually need an original investment of at least $5000 dollars however a money market mutual fund can be opened with just $500 dollars and does not require the use of financial advisor or brokerage firm. They can be purchased through a local bank. Banks will often supply a financial manager, for free, that can answer some basic investing questions and even offer advice and direction in building your financial freedom.

Money market mutual funds like equity mutual funds have given options to the small and casual investors. These money market funds are extremely safe, low risk, and offer liquidity. In addition, money market accounts can actually be tax exempt and can a good way to save money without having to pay federal, state, and local taxes on it.

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.

Different Types Of Mutual Funds

2009-01-31T01:20:00.000-08:00

“If you don't act now while it's fresh in your mind, it will probably join the list of things you were always going to do but never quite got around to. Chances are you'll also miss some opportunities.” -Paul Clitheroe

There are so many choices for investors when it comes to mutual funds. Which is great because investors do not have to settle on investments which almost meet their financial goals and risk levels. They can find a mutual fund that is a customized fit to their investment style. In the northern hemisphere alone, there are over 10,000 mutual funds available that investors can choose between. There are more funds then stocks. Each type of mutual fund has its own level of growth, risk, and rate of return. In addition, each fund has already established investment goals, industries, and investment techniques. There are three basic types of mutual funds – equity funds, fixed income funds, and money market funds.

Money market funds are usually short term investments. Money market funds are similar to Treasury Bills. This is an extremely safe investment and there is almost no risk associated with investment in money markets. This is perfect of the investor who has an aversion to risk. However, remember with little risk come a small rate of return. A good way to balance that is to put a larger sum of money into a money market fund. The rate of return is usually double what a typical savings account would give you.

Income funds offer its investors a regular income usually paid out in the form of monthly dividends. This is why this type of investment is called a fixed income fund. The investment is usually in debt management of the government or large corporations. Most people who invest in income funds are investors who are extremely conservative or people in their retirement years. Income funds have a higher rate of return then money market funds but they do carry more risk with them.

Balance funds offer the investors just the right mix of income, low risk, and appreciation. The goal of this type of fund is to invest in a combination of all types of stocks to achieve a balanced and profitable investment portfolio. Most financial experts suggest that balance funds should be 60% equity and 40% income.

Equity funds are what most people think of when they hear the term mutual fund. This type of investment is long term and the goal is to slowly increase capital over a number of years. As retirement approaches more equity funds allow the investor to draw an income each month from the fund.

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.

Investing in Mutual Funds 101

2009-01-27T01:34:00.000-08:00

Have you ever heard the phrase "it takes money to make money"? Chances are you have, but do you know how to do it? Well, investing in mutual funds presents an excellent opportunity to invest the money that you have to create MORE! Mutual funds are perfect for people who would like to invest there money is a safe, simple way, while still maintaining a diversified portfolio.

One of the golden rules of investing states: when you diversify your investments you reduce your risks without losing your returns. This is exactly what makes mutual funds do. So, how do you go about choosing the mutual fund that's right for you? Read on and learn more about these investment gems and you'll be putting your money to work in no time!

A mutual fund is a collection of money, pooled together by all of its investors, used to purchase specific types of securities. These investments within the mutual fund are decided by investment professionals who run the mutual fund. The professional picks from a wide variety of stocks, bonds, money market instruments, or other financial instruments. The investments selected will depend on the fund's investment objectives. Because of this, it is very important to choose a fund with objectives that are compatible with yours.

There are many benefits to consider when dealing with mutual funds. One major benefit is that mutual funds cost less. Unlike many single stocks, you do not have to have a lot of capital to purchase mutual funds and you can invest small amounts of money at any time with no additional trading costs. This makes mutual funds an excellent alternative to the low interest savings accounts found at local banks. Another benefit to consider is the face that mutual funs are very liquid. If you ever need to access your money invested in a mutual fund, it is very easy to do so.

If you decide to invest in a mutual fund, you will be faced with a slight challenge; "which mutual fund do I choose?" There are over 10,000 mutual funds available at any time, so choosing which one to invest in can be an overwhelming decision. A great way to start is by researching different funds' past performance records and future goals. Along with this you should also consider what fees the mutual fund charges, it is usually a good idea to go with a fund that offers a low expense ratio and to avoid funds with additional sales charges.

Another key factor in choosing a mutual fund is RISK. If a fund shows a rocky past of instability, you should think twice before investing your hard earned cash into it. Also, always check with the US Securities and Exchange Commission (SEC) to make sure the company is legitimate and holds a good upstanding reputation.

You will also have to consider which type of mutual fund to you would like to invest in. There are many different types of funds, such as, stock funds, index funds, municipal bond funds, corporate bond funds, money market funds, U.S. Government bond funds, and mortgage-backed securities funds.

Investing in mutual funds is, without a doubt, one of the best ways to create a diversified, secure, and profitable portfolio. The best way to choose the right mutual fund is to study the market and fully understand all of your available options. If you do your homework, you will be able to pick a fund that will benefit you for years to come.

A great starting point is the website http://investing4dummies.googlepages.com/ an excellent investment resource with lots of information on mutuals funds and more!

How Mutual Funds Work

2009-01-27T01:10:00.000-08:00

Mutual funds are good options for American investors to meet their financial goals. These funds offer professional management and diversification of the funds invested. Mutual funds assets in 1990-2000 rose from 1.065 trillion to a whooping 6.965 trillion dollars. 10% Americans owned funds in 1980 and by 2000, the percentage increased to 49%.

What are Mutual funds?

A company dealing in mutual funds invests the money of several investors in bonds, stocks, securities, assets and several other short-term money-market instruments. The combined ‘holdings’ owned by the mutual fund are known as its portfolio. When you invest in a mutual fund you become a shareholder of the company. Each share in a mutual fund company is the representation of he investor’s proportionate ownership of the fund holdings and the income generated. You earn dividends when the mutual fund company earns a profit, however, your shares will decrease in value if it faces a loss. A professional investment manager does the buying and selling of securities for the growth of the fund.

Types of mutual funds:

Equity funds: These funds involve only common stock investments. They can earn a lot of profit, but are also very risky.

Fixed income funds: They include corporate and government securities. These funds offer fixed returns at a low risk.

Balanced funds: This is the combination of bonds and stocks with a low risk. However, the investment does not earn a lot through these funds.

How it works?

Mutual fund shares can be purchased from the company itself or a broker. There are secondary market investors also, like the New York Stock Exchange. Per share net asset value of the funds or NAV is the price that you pay for buying a mutual fund share. It also includes the shareholder fee that is imposed by the fund, at time of purchase. The best feature of mutual funds is that these shares are ‘redeemable’. You, as an investor, can sell your shares back to the broker. In order to accommodate new investors, mutual fund companies generally create new shares and sell them. They keep selling their shares continuously till they become large. Investment advisers act as separate entities and are responsible for managing the investment portfolio of the mutual funds. Investing in mutual funds tends to lower the risk factor because they are the result of diverse investments. Since someone else manages your investments, you need not worry about keeping constant tabs on the investment, though a periodical check enhances your personal book of accounts. Managing funds is the full time job of the fund manager and he is responsible for the performance and health of the investment.

The rate of returns in mutual funds is based on the increase or decrease of the value, during a specific period. Returns of a fund indicate the track record. It is important to remember that the past performance cannot guarantee future results.

As in the case of any investment or business, mutual funds also have risks associated with the returns. It is essential to set your financial goals and requirements, before investing in a mutual fund.

Joe Kenny writes for the UK Loans Store offering UK secured loans and offer more information on UK mortgages and other loan topics available on site.

Visit Today: http://www.ukpersonalloanstore.co.uk

Socially Responsible Mutual Funds

2009-01-14T21:56:00.000-08:00

“We have to shift our emphasis from economic efficiency and materialism towards a sustainable quality of life and to healing of our society, of our people and our ecological systems.” -Janet Holmes a Court

Investing can have a dark side. There are plenty of shady business ventures which may not be legally but are definitely not moral. There are people out there who believe that to get ahead in business, investing, and life you have to do unpleasant things.

However, there are plenty of ways to make a profit, and be successful in business without losing who you are and adhering strictly or you ethics. If you are concerned about the ethics behind investment ventures there are many websites which list out and offer researched based no just on corporate success but also on their moral compass.

Believe it or not there are socially responsible mutual funds out there. These type of mutual funds belong to companies which make it a point to be socially, morally, and environmentally responsible their actions and the actions of their employees. Many of these companies also contribute a great deal of money to their community and socially important issues. There are several things you can do, as a socially responsible investor, to make sure the stocks you are investing in belong to a socially responsible corporation.

There are fund managers that have the sole responsibility of seeking out and create good mutual funds which are both profitable and socially responsible. They only let corporations into their mutual funds if they exhibit certain behaviors which adhere to the goals of the fund and the demands of the investors.

For example, if a mutual fund has a goal to be environmentally friendly, it will seek out corporations which follow all the environmental laws, rules, and are active in environment preservation. They would exclude companies which test on animals or support nuclear power.

For example, funds with a strong sensitivity towards issues of environmental concern will specifically pick stocks in companies who go beyond fulfilling environmental requirements, but the fund will most likely invest also in companies whose practices reflect other concerns, such as animal testing or nuclear power.

Shareholder activism is something that is taken very seriously. Not only do these people invest in these corporations but make a point to get personally involved. Investors will try to persuade companies to behave in a socially responsible way through letters, suggestions, policy meetings, proposal, and using voting rights.

The power of shareholder activism lies in the number of being that are invested in making a change. A couple of people are just seen as a nuisance. If you have ten thousand people, real investors, who are pressuring a company to change it's policies – things will get done.

Visit the Global Investment Institute and signup for our free Investing For Beginners E-Course at http://www.Global-Investment-Institute.com

Investment webmasters or publishers, please feel free to use this article provided this reference is included and all links remain active.

How to Invest in Mutual Funds

2008-10-30T00:18:00.000-07:00

What Are Mutual Funds?

2008-10-20T05:26:00.000-07:00

Why are they so popular? For some, it is because of their great returns. Others like funds because they are easy to buy and sell. Still others like them because they are diversified and less risky.

Mutual Funds - A Secure Investment

2008-10-14T00:05:00.000-07:00

There are particularly three ways in which you can make money from a mutual fund. They are:

In a nutshell, here are the salient points of the advantages of mutual funds:

3. Economy of Scale: The transaction expenses are relatively low as a mutual fund is bought and sold in large amounts of credits.

4. Liquidity: Mutual funds provide the opportunity of converting shares into cash at any point of time.

5. Simplicity: It is easy to buy a mutual fund. Most companies have their own automatic purchase plans, and the minimum investment rates are very small.

Buying Mutual Funds

2008-07-23T01:15:00.000-07:00

It looks like the market is ready to start up again so it is time to buy mutual funds, but you only want to invest your money in funds that go up. First, you don't want to start with a loss so be sure to purchase no-load mutual funds. There is no need to ever pay commissions as there are several thousand funds that have no commission whatsoever for either buying or selling.

If you talk with a broker he will try to confuse you that a commission fund is better than a no-load fund. He is lying. Find another broker. Also don't pay any attention to who the fund manager is. All big name fund managers have cold periods when their funds go down.

Another thing the "experts" tell you is look at the expense ratios. Nonsense again. Whether it is 1%, 2% or 3% the only thing you are concerned with is is it going up because that is the net figure for your bank account. If you buy a fund at $20/share and it goes to $40/share do you care if the expense ratio is 10%? (It won't be.) The only thing that counts is the bottom line.

Now the most important thing. Which no-load fund? There are several good sources. Go to the library to look in recent back issues of Investor's Business Daily. On the first page of the second section under "Making Money in Mutuals" near the bottom there will be a box listing 25 to 50 funds. You will want to find the top funds for the past 3 months, 6 months and 9 months sometimes in several different issues of the paper. Don't pay any attention to a longer period of time than 12 months. You want funds that are going up now. In the same paper you will find the toll-free phone numbers listed by the names of the funds.

Or if you can use a computer go to www.smartmoney.com. Click on Mutual Funds. Then click on 25 Top Funds. Here you will find another list of the best performing funds for the past year. Most of them are no-load and if there is a load charge it is shown in the Fee column. There are many Internet sources like this if you want to hunt for them.

Call to be sure they have no redemption fees if you decide to sell them in a short period of time. This is important.

With your computer or you can use one at the library I suggest you go to www.bigcharts.com or www.cbsmarketwatch.com to look up each fund by the symbol. You will immediately see why these particular funds are a good buy. They have been going up even when the general market was going down. As long as this upmove continues you will want to own these funds. When they start down you must sell them to protect your capital and your profits. Never stay with a fund that is going down. Brokers will not do this for you. You must be in charge of your own money.

This may or may not be the start of the next bull market move, but if it is this is the right way to buy mutual funds now or any time. (Cut out and save this column.)

Al Thomas' book, "If It Doesn't Go Up, Don't Buy It!" has helped thousands of people make money and keep their profits with his simple 2-step method. Read the first chapter at http://www.mutualfundmagic.com and discover why he's the man that Wall Street does not want you to know.

al@mutualfundstrategy.com; 1-888-345-7870

Buying Mutual Funds

2008-07-04T23:35:00.000-07:00

Call to be sure they have no redemption fees if you decide to sell them in a short period of time. This is important.

This may or may not be the start of the next bull market move, but if it is this is the right way to buy mutual funds now or any time. (Cut out and save this column.)

al@mutualfundstrategy.com; 1-888-345-7870

Basics Of Mutual Funds

2008-06-30T22:43:00.000-07:00

About Investments How do I apply for Investments in a fund?
Where do I get applications?
What is a Systematic Investment Plan?
How do I apply for a Systematic Investment Plan?
How do I make an additional purchase?
Are there any minimum amount limits for subsequent purchases in the same scheme?
How do I transfer money between various schemes? Do loads prevail?
Is there a limit to transfer money from one scheme to another?
What is a lock-in period?

About Repurchase (Redemptions) When and how can I redeem my investments? What is a Systematic Withdrawal Plan? Do loads prevail? I have not received my redemption proceeds? What should I do?

About Dividends

How do I get dividends?
What is dividend reinvestment? Do loads prevail?
I have not received my dividend? What should I do?

General

How do Minors apply?
How to apply under Power of Attorney (POA)?
What is Nomination and how does it work?
How do I apply for the PIN facility?
Can I get a loan against my fund units? What is the process?
What do NRIs do for Investments and Redemptions?
I have multiple accounts in a fund. Can I consolidate?
How are monies transferred in the event of Unit holders death ?

Mutual Funds in general What is a Mutual Fund?

Mutual Fund is another saving or investment vehicle, akin to, but different from bank deposits, shares etc., It is an entity wherein people / institutions pool small amounts of money into larger amounts for investment and achieve returns with minimum risk, which otherwise is not possible by a common man. Types of Mutual Funds?

Basically closed ended or open ended. Further with loads and no-loads. Again based on investment objective can be further classified into :-
1) Growth funds
2) Income funds
3) Balanced funds
4) Money Market funds
5) Tax Savings funds
6) Specialized funds and
7) Assured Return funds etc…

What is NAV?

Net Asset value is the networth of the Mutual Fund at the close of any Working Day. What is Applicable NAV?

For the purpose of purchase, redemption & switches, the applicable NAV is the Net Asset Value per Unit at the close of the Working day on which a request, complete in all respects is accepted and received before the cut-off time for the particular scheme. Otherwise, the applicable NAV would be the one for the next business day. What is a load and types thereof?

It is a charge paid by the Investor to the Mutual Fund.

There are 3 types,
1) Entry load – this is paid when an investment is made in a scheme
2) Exit load – this is paid when a redemption is carried out from a scheme and
3) CDSC ( Contingent Deferred Sales Charge) - this is an Exit charge payable by the Investor for a No load scheme.

What is the difference between Fund Scheme and Plan?

A Fund Scheme is the fund itself and based upon the investment objectives. It may have several plans pertaining to growth or distribution of dividends. What is forward and historical pricing?

Forward pricing is the price arrived at after the closing hours of a Working day, which the Investor is not aware of. Historical pricing is a price which an Investor knows before transacting, typically transactions allowed on the basis of the previous day’s NAV.

About Account Statement What is an Account Statement?

It is a statement summarising all the transactions and other details like unit balance, value of units etc. of the Investor. It also records all his / her registration attributes and records changes therein as and when they occur. It is a conclusive proof of their investments and shows the financial standing on a given date. How do I get a duplicate account statement?

An account statement can be obtained from the following sources :-

Requesting any of the CAMS SERVICE CENTREs

Writing / email / phone to back office at CAMS, Chennai or its SERVICE CENTREs

Requesting through CAMS Website under Account Information –

Email robot service sends the account statement to the registered email id in no time

Requesting through CAMS Website under Query / Complaints –

Email / physical account statement would be sent to the Investor at their registered address

I have changed my residence. What should I do?

You have to inform the nearest CAMS SERVICE CENTRE / concerned AMC in writing, appropriately signed, so that the change is recorded in the database. Alternatively, you can submit a request at the CAMS website to record the change by logging on to the Account Information with a PIN reference under Investors section. An acknowledgement will be sent reflecting the change. I have a new bank account. What should I do?

About Investments How do I apply for Investments in a fund?

By making an application to the Mutual Fund. The same can be submitted to the CAMS SERVICE CENTREs / concerned Fund. Where do I get applications?

The applications can be obtained from CAMS SERVICE CENTREs / Fund offices or branches. Alternatively, they can be downloaded from the CAMSONLINE Website, wherein specific Fund (for a few funds) applications are also available apart from generic ones. What is a Systematic Investment Plan?

Just like a recurring deposit in a Bank, this scheme enables an investor to invest periodically over a period of time. Anybody can avail of this facility subject to the terms and conditions contained in the application form / Offer Document. It is a convenient way to " invest as you earn " and affords the investor an opportunity to enter the market regularly, thus averaging the acquisition cost of Units. How do I apply for a Systematic Investment Plan?

An application can be made through a letter or with a regular application. This needs to be submitted to a CAMS SERVICE CENTRE / concerned AMC along with the no. of cheques for the duration of plan. Make sure that the cheques are drawn locally or as per terms of the Offer Document How do I make an additional purchase?

By submitting an application along with a locally payable cheque /DD at a CAMS SERVICE CENTRE / concerned AMC office. Are there any minimum amount limits for subsequent purchases in the same scheme?

Yes, limits of minimum amount are applicable for additional purchases for schemes and will be mentioned in the Offer Document. How do I transfer money between various schemes? Do loads prevail?

Money can be transferred between schemes by making a switch of units from a scheme to another Scheme. A Source scheme is one from where you want to switch out and a Target scheme is one where you want to switch in. A switch can be effected by applying through the transaction slip available in the Account Statement or by a request letter, appropriately signed. Yes, Switches are subject to loads depending upon the Scheme details Is there a limit to transfer of money from one scheme to another?

Yes, the target scheme should have the minimum subscription amount as specified in the Offer Document. What is a lock-in period?

This is a pre-defined period during which the investments cannot be redeemed. This could be due to a legal implication (erstwhile 54 EA & 54 EB or ELSS sections of Income Tax Act ) or due to a restriction levied by the AMC (this could be for a short period of say, 7 / 10 days depending upon the AMC). This short restriction is to ensure that the Units are not redeemed before encashment of the Investment cheque.

About Repurchase (Redemptions) When and how can I redeem my investments?

Investments can be redeemed after the expiry of the lock-in period, if any, either by submitting a physical request to any of the CAMS SERVICE CENTREs / concerned AMC or requesting the same through the on-line services available under Investors section at the CAMS website. What is a Systematic Withdrawal Plan? Do loads prevail?

This plan enables the Unit holders to withdraw fixed sums from their Unit Accounts at periodic intervals. Any Unit holder can avail of this facility subject to the terms and conditions contained in the application form / Offer Document, to include exit loads if applicable. I have not received my redemption proceeds? What should I do?

You may write / email to any of the CAMS SERVICE CENTREs or to the AMC concerned addressing the same for further course of action.

About Dividends How do I get dividends?

Dividends would be paid by cheques, drawn in the name of the sole holder /first-named holder ( as determined by the account and mailed to the last address recorded in the books ). The Bank name and the Account no. as specified in the records, will also be mentioned in the cheque. The cheque will be payable at par in all the cities designated by the Fund. In case of other cities, you will be paid by a Demand Draft after deducting the demand draft charges (if any and depending upon the concerned AMC). What is dividend reinvestment? Do loads prevail?

Creation of Units in lieu of the amounts due as dividends, is termed as dividend reinvestment. There is no outflow of money here. Normally, loads are not applicable. However, the terms are clearly specified in the Offer Document. I have not received my dividend? What should I do?

You may write / email to any of the CAMS SERVICE CENTREs or to the AMC concerned addressing the same for further course of action.

General

How do Minors apply?

Parents / Lawful Guardians can apply on behalf of a Minor. They can sign the application on behalf of the Minor and status of the Investor in the Account Statement would also reflect the same. How to apply under Power of Attorney (POA)?

Any investment made can be operated upon by a POA holder. This is possible after receipt of the POA by the Registrar, duly attested in original. Once the POA is registered, the POA holder steps into the shoes of the Investor. The right of operating the account reverts back to the Investor only after the POA is revoked. What is Nomination and how does it work?

Nomination is a process whereby the Units get transferred to a nominee’s favour upon the demise of the Investor. A form needs to be submitted with relevant particulars of the Nominee by an investor duly signed, to CAMS for recording the same. How do I apply for the Personal Identification Number (PIN) facility?

Upon request, a pre-printed disclaimer form is sent to you for completing the formalities of PIN registration. This form duly filled and signed,

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Stocks vs. Mutual Funds

2008-06-24T22:37:00.000-07:00

Stocks have several pros and cons associated with them. Stocks are a great option if you know what companies you want to invest in. They are also a great option if you are interested in day trading. While stocks offer you flexibility and control over the diversity of your investment portfolio they require a lot of work to keep your portfolio properly diversified. A lot of financial experts recommend that your investment portfolio contain investments in at least 20 different companies and in at least 10 different industries. Making this many stock selections can be difficult to do.

Mutual funds are another investment option that you have. A mutual fund is basically an investment set that is controlled by a financial management company. This management company selects the stocks, bonds and other investments that are held by the mutual fund. Mutual Funds are a great way to easily diversify your investment portfolio. The management company does all of the leg work for you. While mutual funds are a great investment option they do have a few drawbacks. The first drawback is that they charge management fees and carrying fees. These fees cut into your profits and investment capital. The second drawback is that the performance of the mutual funds depends partially on the management company’s ability to select good investments and the company’s ability to manage the fund’s investment portfolio. Another drawback to mutual funds is that you don’t have any say in which investment products the mutual fund invests in. Because of this the fund may invest in a company that you would prefer not to invest in, or they may select an investment product that you think is a bad investment. Finally, mutual funds are susceptible to fraud. In recent years there has been several high profile fraud cases filed against mutual fund management companies.

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Mutual Funds Basics

2008-06-19T00:01:00.000-07:00

There are a number of investment options available. Many people have chosen mutual funds as their primary means of investing. Mutual funds provide professional management, diversification, convenience and liquidity. As with all investments, mutual funds are not risk free. It is essential that you make an informed investment decision and choose a mutual fund which is right for you depending on your goals, investment time frame and risk tolerance.

Over the long-term, the success (or failure) of your investment in a fund also will depend on factors such as:

Fund's sales charges, fees, and expenses;
Taxes you may have to pay when you receive a distribution;
Age and size of the fund;
Fund's risks and volatility;
Recent changes in the fund's operations.

When you invest in a mutual fund, your money is combined or pooled with the money of other investors and used to purchase specific types of securities. Mutual funds are run by investment professionals who decide which investments to buy or sell for the fund. The professional picks from a wide variety of stocks, bonds, money market instruments, or other financial instruments. The investments selected will depend on the fund's investment objectives. That's why it's so important for you to choose a fund with objectives compatible with yours.

Generally, the success of your investments over time will depend largely on how much money you have invested in each of the major asset classes – stocks, bonds, and cash – rather than on the particular securities you hold. When choosing a mutual fund, you should consider how your interest in that fund affects the overall diversification of your investment portfolio. Maintaining a diversified and balanced portfolio is key to maintaining an acceptable level of risk.

The types of investments that a mutual fund holds, its investment goals, the fees charged, and information about who manages and advises the fund are described in a prospectus . You should receive and review a prospectus before investing.

The prospectus usually tells you how well the fund has performed in the past. This information can give you an idea about what you might earn on your investment. As with all investments, however, past performance is no guarantee of future results. All investments carry some risk, including loss of principal.

Remember; don't focus too much on returns. Any track record under 5 years is noise. Try to take a look at how a fund has done over longer periods of time and try to compare it to it peers or an index that represents the type of asset class the fund is in. It is not fair to compare a government bond fund to the NASDAQ.

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No Load Mutual Funds or Exchange Traded Funds (ETFs)?

2008-06-09T04:45:00.000-07:00

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international.

The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors.

In my newsletter I track the currently most appropriate ETFs for you to consider. For more detailed information you can visit these web sites:

http://www.nasdaq.com
http://www.amex.com
http://www.ishares.com

In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds? One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount broker are so low they almost can be disregarded, usually less than 0.1% of the transaction.

For example, I have used ETFs for some managed account clients during my last Buy cycle, which started on 4/29/03, and paid $27 for a $28,000 order — and that wasn't even with the cheapest discount broker.

So, if these ETFs are so great, why hasn’t your broker or financial planner recommended them to you? Simple! Brokers, and those advisors working on commissions, don’t make money on ETFs; no commissions up front or hidden on the back end. It's simply not in their interest to promote them.

With all the positives for the investor, there is one disadvantage, which may not be applicable to you unless you are a hot shot no load mutual fund picker. It is that in any given economic environment really super performing mutual funds can outperform the indexes, but an ETF can never outperform the index it’s tied to. You would need to look at your own investment record to know whether this is a downside for you.

Here’s a real life example from my advisory practice. My trend tracking indicator signaled a Buy on 4/29/03. Based on my momentum indicators I chose 5 no load mutual funds and 4 ETFs. Over the following 3 months my ETFs gained anywhere from +10.02% to +22.36%, while my no load mutual funds gained from +9.15% to +36.35%. If you’re fortunate enough to make a superior selection you will outperform an ETF. Of course, that presumes you picked a very successful fund as compared to only a moderately successful ETF.

A word of caution! Just because ETFs are cheap and easy to buy doesn’t mean they will guarantee you a profit. You can lose money with them just as easily as you do with no-load mutual funds. You still need to make sure you have a disciplined methodology in place to help you get into and out of the market. If you don’t, you’re gambling no matter what you invest in.

Having gotten the disclaimer out of the way, hopefully these insights into ETFs will broaden your perspective on ways you can prosper in your investments.

About The Author

Ulli Niemann is an investment advisor and has been writing about objective, methodical approaches to investing for over 10 years. He eluded the bear market of 2000 and has helped countless people make better investment decisions. To find out more about his approach and his FREE Newsletter, please visit: www.successful-investment.com; ulli@successful-investment.com

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Mutual funds: Protect Yourself With Segregated Funds

2008-05-30T23:43:00.000-07:00

Segregated funds were initially developed by the insurance industry to compete against mutual funds. Today, many mutual fund companies are in partnership with insurance companies to offer segregated funds to investors. Segregated funds offer some unique benefits not available to mutual fund investors.

Segregated funds offer the following major benefits that are not offered by the traditional mutual fund.

1. Segregated funds offer a guarantee of principal upon maturity of the fund or upon the death of the investor. Thus, there is a 100 percent guarantee on the investment at maturity or death (this may differ for some funds), minus any withdrawals and management fees - even if the market value of the investment has declined. Most segregated funds have a maturity of 10 years after you initial investment.

2. Segregated funds offer creditor protection. If you go bankrupt, creditors cannot access your segregated fund.

3. Segregated funds avoid estate probate fees upon the death of the investor.

4. Segregated funds have a "freeze option" allowing investors to lock in investment gains and thereby increase their investment guarantee. This can be powerful strategy during volatile capital markets.

Segregated funds also offer the following less important benefits:

1. Segregated funds issue a T3 tax slip each year-end, which reports all gains or losses from purchases and redemptions that were made by the investor. This makes calculating your taxes very easy.

2. Segregated funds can serve as an "in trust account," which is useful if you wish to give money to minor children, but with some strings attached.

3. Segregated funds allocate their annual distributions on the basis of how long an investor has invested in the fund during the year, not on the basis of the number of units outstanding. With mutual funds, an investor can invest in November and immediately incur a large tax bill when a capital gain distribution is declared at year-end.

There has been a lot of marketing and publicity surrounding segregated funds and how much value should be placed on their guarantee of principle protection. In the entire mutual fund universe, there have been only three very aggressive and specialized funds that lost money during any 10-year period since 1980. Thus, the odds of losing money after ten years are extremely low. If you decide you need a guarantee, it can cost as much as 1/2 percent per year in additional fees.

However, with further market volatility these guarantees could be very worthwhile. In addition, most major mutual fund companies also offer segregated funds.

About the author: Tony Reed is the author of "Mutual funds: protect yourself with segregated funds", please visit his website Mutual Funds & Stock Trading for more information.

This article is free for republishing as long as you leave the article title, author name, body and resource box intact (means NO changes) with the links made active.

Managing Investment Portfolio Risk - Mutual Funds that Work Like Hedge Funds

2008-05-28T05:11:00.000-07:00

We look at mutual funds that are not structured like typical mutual funds, that is, funds that don't invest exclusively in long only positions in stocks and bonds. These can be powerful tools to manage the risk management of our investments.

As the SEC has loosened the rules on mutual funds shorting stock and investing in options, a small group of funds has emerged that invest like some hedge funds. These can be purchased by almost anyone, unlike hedge funds, which are only available to accredited investors (e.g. those with a net worth of more than one million dollars).

Appropriate use of these mutual funds can be quite effective in providing both diversification and hedging of your investment portfolio. According to the Securities and Exchange Commission, there are several types of hedge funds.

However, we will examine some of the more conservative strategies. One of these is the Long/Short fund.

Long / Short Funds:

Long/Short which includes sector and market neutral/relative value funds. These funds try to exploit perceived anomalies in the prices of securities. For example, a hedge fund may buy bonds that it believes to be underpriced and sell short bonds that it believes to be overpriced. No matter what happens to overall interest rates, as long as the spread between the two narrows, the fund profits. Conversely, if spreads widen, gains can turn quickly into losses. Long/short equity is the most frequently used strategy among hedge funds.

Arbitrage Funds:

Another of the lower risk strategies is Risk/Merger Arbitrage. These funds attempt to profit from pending merger transactions by, for example, taking a long position in the stock of the company to be acquired in a merger, leverage buyout or takeover and simultaneously taking a short position in the stock of the acquiring company.

Since these strategies are fairly conservative, they are ones that would be most appropriate in managing portfolio risk. Also, they have a low correlation to the market so some advisors see them as alternatives to bond funds in your portfolio.

Morningstar has added a category called Long/Short to its listing of mutual funds. Morningstar puts arbitrage funds into that same category as well.

There are many new entrants into this field. While there may be several of the newer funds that are excellent offerings, the most straightforward way to judge the risk management performance of these funds is to look at their history during at least some part of the most recent bear market (2000 2002).

Some example mutual funds that fared reasonably well in the last bear market include:

Merger Fund (MERFX):

This fund has been around for over 10 years. The basic approach is to capture the spread between the share price of companies that might be acquired and the proposed purchase price. This is done by buying the shares of the target firms of deals and occasionally shorting the stocks of the acquiring firm. This fund did fairly well during the bear market, although it had only fair performance in 2005.

Schwab Hedged Equity Fund (SWHIX):

A clone of its older sibling (SWHEX) that has significantly lower minimum investment, its managed by a group that has a long history of success in the small cap stock arena. The volatility of this fund is well below the market, and its returns have been good for a long/short fund.

Gateway Fund (GATEX):

This fund has been around for years. It has a unique approach of holding large cap stocks with high dividend yields and selling covered calls for extra income, while holding put options to guard against a market downturn. Once again did reasonable well in the bear market years.

Calamos Market Neutral (CVSIX):

One of the older offerings in the long/short group, it has a good track record that extends back through the 2000-2002 bear market. This fund utilizes a convertible arbitrage approach to target an 8-10% long term annual return. (This one has a sales load.)

Hussman Strategic Growth (HSGFX):

This is a hard one to categorize. John Hussman runs the fund, and buys stocks based on his valuation models, and then hedges against market risk by synthesizing a short position in a couple of the major indices with short call options. The hedge varies based on his appraisal of current market conditions. This is not your typical mutual fund, but over the last several years has had a very low drawdown, with reasonable returns.

As you can see, the universe of mutual funds that adopt the best strategies of hedge funds is increasing. These funds are a powerful tool in building a diversified, low risk portfolio, hedging away some of the market risk while keeping a reasonable return for your investments. But keep in mind that while all these fall into Morningstars category of long/short funds, they each have unique approaches to the concept of hedging. So before you invest in any of them be sure you understand the specifics of each approach to ensure it is a good fit for your portfolio.

John Ruppel writes for Fundztrader.com. Fundztrader offers model portfolios featuring Fidelity Mutual Funds, Fidelity Select Funds, and an ETF trading system, including iShares and Powershares. More information and a free newsletter are available at http://www.fundztrader.com

6 Reasons Why Exchange Traded Funds Are Better Than Mutual Funds

2008-05-25T23:45:00.001-07:00

Exchange traded funds (or ETFs) are better for most investors than mutual funds. The mutual fund industry has experienced tremendous growth over that last twenty-five years or so. But it's a new era now. It's the era of the ETF.

What are exchange traded funds? ETFs are similar to index mutual funds. Essentially, an ETF is a portfolio of securities that is intended to provide investment results that, before fees and expenses, generally correspond to the price and yield performance of the underlying benchmark index. ETFs trade on the stock exchanges. As such, they offer features of a mutual fund in a stock-like instrument.

There are at least six important advantages that exchange traded funds have over mutual funds…

ETFs, instead of pricing once a day after the market closes (like mutual funds), are traded throughout the day as if they were regular stocks.
Since an ETF trades like a stock, it can be bought and sold (and shorted at any time during market hours.
Investors can calculate the value of an ETF during the day because the composition of the underlying portfolio - normally a published index - doesn't change. For example, the value of the SPDR ETF (SPY) that tracks the S&P 500 index is calculated continuously throughout the day.
An ETF can be exchanged for the underlying assets it represents with the issuing institution for a small fee. It means that ETFs will not trade at significant discounts or premiums to the value of the underlying assets of the fund. This is not true with closed-end mutual funds.
Because they are not actively managed and have very little portfolio turnover, ETFs carry some nice tax advantages over mutual funds because they distribute relatively few capital gains.
Most ETFs have very low management fees, especially compared to mutual funds. And the lower the expenses, the more money goes into the investor's pocket.

So exchange traded funds offer most of the advantages of mutual funds -- instant diversification and many to choose from -- without the major disadvantages.

The primary disadvantage of an ETF is that if you are making small transactions on a regular basis, you will pay a commission on each transaction -- just like you would by buying and selling a stock.

But, all in all, the advantages of an exchange traded fund far outweigh any disadvantages. I suggest that you use ETFs as an important part of your investment strategy.

Larry Holmes invites you to visit http://www.smart-money-report.com/ Your common sense guide for financial and investment success.

Exchange-Traded Funds are an Interesting Alternative to Mutual Funds

2008-05-22T23:30:00.000-07:00

Exchange-traded funds (or EFT for short) have recently become a more and more interesting alternative to classic mutual funds. As of today, there are over 175 EFTs accumulating over 200 billion dollars - and these numbers are growing. While it is improbable for EFT to completely supersede classic mutual funds (at least in the near future), they are an interesting alternative and probably a must-have in every beginners portfolio.

What is EFT?

Basically, an exchange-traded fund is a fund made of a portfolio of stocks from a single market. The portfolio is composed based on an index, industry sector or (more rarely) a country the companies are tied to. There are many stocks in each EFT portfolio, so the risk of the losses is roughly the same as in case of mutual funds. However, the expenses are tied thus keeping EFT funds from going much lower, and the fees charged by EFTs are minimal, giving investors additional income. What's more, EFTs trade like stock, making life easier both for investors and fund managers.

Benefits

1. Low fees The most obvious strong point of EFTs is their low fees. While lowering them to such levels as 0.2% a year may look like magic, it is completely normal - due to the fact that all the stocks are tied to some single slice of the market, the funds can reduce the amount of money spent on market analyses. 2. Lower taxes Unlike mutual funds, exchange-traded funds distribute nothing but a dividend from time to time, so there are few reasons to get taxed. 3. They're transparent You can check real-time what your EFT is actually doing with your money, while mutual funds report their holdings only twice a year. 4. Extra trading opportunities EFTs are sold just like normal stocks, thus creating many different trading options. Stop-loss and limit orders are but one of many opportunities available only to stock trading.

Switching to EFT

Switching to exchange-traded funds is relatively easy on tax-free accounts, such as IRA (Individual Retirement Account), where you simply cease to invest in mutual funds or stocks and start buying EFTs. However, when we're speaking about taxable accounts, you will have to make a switch only a little at a time to ease the taxation burden on your revenue.

Remember that while Exchange-traded funds are an excellent investing opportunity, it is not without risk, so consult with your Financial Professional before investing, especially if you have a taxed account.

For more information on learning stock investing, visit http://www.learn-stock-investing.info