Mutual funds are a hot commodity with investors and financial institutions. They are so popular, in fact, that today there are more mutual funds in existence than there are individual stocks. If you are considering investing in a mutual fund but don’t know anything about them, then get ready to learn by reading what questions other people have had about mutual funds.
Top Mutual Fund Questions Of 2008 – What Is The History Of Mutual Funds?
The very first mutual fund was formed in the
Top Mutual Fund Questions Of 2008 – What Is An IRA?
In 1975, a provision was added to the Internal Revenue Code that allowed individuals already in a corporate pension fund to contribute up to $2,000 per year to a Individual Retirement Account. This was by far and away the largest contributing factor contributing to the growth of mutual funds over the last 33 years.
Top Mutual Fund Questions Of 2008 – What Is A No-Load Fund?
This type of fund is offered by an open-ended investment company that imposes no sales charge (load) on its shareholders. Investors buy shares in no-load funds directly from the fund companies, rather than through a broker, as is done in load funds.
Top Mutual Fund Questions Of 2008 – What Is A Mutual Fund?
A mutual fund is simply a financial intermediary that allows a group of investors to pool their money together with a predetermined investment objective. The mutual fund will have a fund manager who is responsible for investing the pooled money into specific securities. When you invest in a mutual fund, you are buying shares of the mutual fund and thus you become a shareholder of the fund.
Top Mutual Fund Questions Of 2008 – What Is An Index Fund?
Most investors are probably best off in the long run buying an Index Fund. This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor’s 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks.
Top Mutual Fund Questions Of 2008 – What Is Net Asset Value?
Net Asset Value (NAV) is the value of a share in a mutual fund and is calculated by dividing the total value of the fund, less the fund’s liabilities, by the number of shares currently issued and outstanding. For most of the funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day.
Top Mutual Fund Questions Of 2008 – What Is A Public Offering Price?
A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by different classes.