A Peek Into the Mutual Fund History Book

Before you start working on developing your portfolio, it is important to have some kind of understanding about mutual fund history. This will help you understand not only why you want to invest in a particular fund, but also why mutual funds are preferable to stocks, fixed deposits and other investments. With mutual fund history, there are two areas you need to consider. The first refers to the history of these funds at large and how they developed as a much sought after investment opportunity. The other is the history of the particular fund in which you are looking to invest. Both these areas are very important not only independently but also in terms of how they correlate to each other.

Mutual Fund History Over The Years

While there is still some debate going on as to when the first mutual fund was actually launched, experts can safely say that it was in the first half of the 19th century in Europe. It started out as a way of giving small investors a chance to diversify their investments and thus be exposed to a lower risk. In the 1890's this idea travelled to the United States, where it then became very popular in the early 20th century. In 1924 the Massachusetts Investors Trust introduced what was called the Modern Mutual Fund, which was the first modern fund. From then onwards, especially after each of the world wars, these funds have experienced tremendous growth, with investors turning to them especially in times of economic strife and shortfalls.

With the recent recession, many investors have lost a large percentage of their investments. Due to this there is a marked air of caution that has permeated the financial markets at the moment. But, with the unease settling down gradually, investors have now started looking at mutual funds again as a safer and more reliable option.

Individual Mutual Fund History

When deciding on what funds to add to their portfolio, investors often look to the history of that particular fund from the time of its origin to the present. This is to help them determine how exactly the fund has developed and how much growth is expected in the future. Many financial companies spend a lot of money and time on gathering and presenting this information to their investors. They know that this is crucial to helping customers make a decision, and therefore this information is highlighted regularly through the website, newsletters and other publications. At the end of every year, a detailed analysis is conducted on how the fund performed during the year, and this again is circulated among the investors.

By combining the historical data of a particular fund with that of mutual funds in general, one can develop a well-balanced and realistic perspective on both. That is why it is important to consider mutual fund history at both the micro and the macro levels before you make any decision about your investments.

Autor: Albertina Belmont

Once you have decided either short or long-term financial goal, you should check briefly a few point about mutual fund market and Mutual Fund Investment. For more information about mutual funds and investment strategies visit http://www.financeenquiry.com.

Added: October 22, 2009
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A Small List of Mutual Funds

In the investment market, you can find a list of mutual funds to choose from. There are various investors in the market with varied needs, objectives and risk profiles. So, one fund cannot satisfy all the preferences of the investors.

Classification of Mutual Funds

Normally, an MF is classified into two broad categories:

-On the basis of execution and operation
-On the basis of yield and investment pattern

The list of mutual funds based on execution and operation are:

-Open-ended Fund - In this scheme, the corpus and time of the fund is not prefixed. You can purchase and sell any number of units at any time. The main features of these funds are flexibility, instant liquidity, not traded publicly through any exchanges, ability to repurchase and resell and so on. The main purpose is income generation and their prices are associated to Net Asset Value (NAV) of the units.
-Close-ended Fund - In this scheme, the corpus and duration of the fund is pre-determined. The fund expires when the subscription reaches the fixed target. The main purpose is capital appreciation. Since these are traded on stock exchanges, any market trend (both favorable and unfavorable) affects the performance of the fund.

The list of mutual funds based on yield and investment pattern are:

-Income Fund - The main objective of this scheme is to generate and distribute income to the investors periodically. The income generated is usually higher than that from bank deposits. The investment pattern is usually oriented towards high and fixed income generating securities. This is the best option for retired people.
-Growth Fund - These funds concentrate in generating long term capital appreciation and do not provide any regular income. They are also referred to as 'Nest Eggs' funds. The investment strategy is oriented towards equities which have high risk tolerance and high growth potential. This is best suitable if you are salaried or if you are a business person.
-Balanced Fund - These funds are a combination of income and growth mutual funds. They are also known as 'income-cum-growth' funds. They mainly concentrate in allocating regular income along with capital gains. The investment pattern is generally balanced between securities providing high growth and fixed income.
-Specialized Fund - These funds are oriented towards the special needs of specific categories of people. This fund allows foreign investors to invest in domestic securities of other countries. They are usually confined to a particular sector or industry. These funds are highly risky and serve as a good option for high risk takers.
-Money Market Mutual Fund (MMMF) - These are similar to open-ended mutual funds and have all the features of an open-ended fund. But, the investment strategy varies as these are invested in money market instruments like treasury bills, commercial paper and the like.
-Taxation Fund - This fund is essentially a growth fund. The only difference is that it offers tax rebates to the investors. This is the most suited choice if you are a salaried person as you can enjoy tax discounts.

Few Other Classifications of Mutual Funds

Apart from the above-mentioned classification, there is another list of mutual funds. They are as follows:

-Leveraged Fund - Also referred as 'borrowed funds'. They are mainly used to raise the value size of a fund portfolio.
-Dual Fund - These are a special form of close-ended fund. They give two different kinds of investors an opportunity to make a single investment.
-Index Fund - In this fund, the portfolios are designed in such a way that they move in accordance with the market index.
-Bond Fund - These are income generating funds. The portfolio mainly consists of securities like bonds which have the capacity to generate fixed income.
-Aggressive Growth Fund - These funds are more focused on capital gains. They are highly volatile and are usually invested in securities that are highly speculative.
-Off-Shore Fund - These funds are designed for non-residential investors. These funds are registered in foreign countries. They contain country and currency risk but the returns are high.

So, the decision to invest in mutual funds solely depends on your requirements and risk profile. You could pick a fund that suits your profile from the above list of mutual funds.

Autor: Albertin Abelmont

For more information about Mutual Funds, investment and strategies please prepare check list about Mutual Fund Market and Mutual Fund Investment.

Added: October 21, 2009
Source: http://ezinearticles.com/

Check Your Mutual Fund Performance

Mutual fund performance depends a great deal on the fund manager. If an experienced and expert manager manages the fund, it will certainly perform well. The role of a manager is very important since the investment strategies are designed by him. The manager needs to prepare for contingencies and unforeseen market fluctuations. In recessionary times like this, it is very crucial to invest strategically. Thorough analysis and research are required on the part of the manager. The manager is paid fees, which are a certain percentage of the total net asset value of the fund. The manager's earnings are directly proportional to the mutual fund performance. A manager is expected to have expert knowledge and credentials for his past performance. It is a very responsible position and requires a complete understanding of the stock and other financial markets. Typically, a mutual fund invests in stocks, bonds, money market instruments, government securities and so on. Thus, it is imperative that the manager has knowledge about all the financial markets.

How Does A Mutual Funds Work?

A mutual fund is a plan wherein money is pooled from several investors and invested in various financial markets. The money is not placed in one company but rather is diversified into different financial markets. This diversification helps in reducing the risk of losses. The risk is spread across different companies, so even if one company fails to perform, there are others that can compensate for the losses. Mutual fund holdings are in the form of units, and their price in the market is called the net asset value, or NAV. When an investor purchases a mutual fund, he or she receives a certain number of units in the fund. The number of units will always remain the same; however, the NAV may fluctuate according to the mutual fund performance and market conditions. Mutual funds are subject to market risk, but the risk is less than for other openly traded financial instruments. They are loaded with several beneficial features like liquidity, economies of scale, professional management and diversification of investment, among others.

A mutual funds house operates and manages the fund. Each fund house will have different types of funds, and you can choose the one that best suits your needs. There are three broad categories of funds: open-ended funds, close-ended funds and unit investment trusts. Open-ended funds are usually equity-oriented and a little risky as compared to close-ended funds. Depending on your risk appetite, you can choose a fund for investment purposes. Age, too, plays an important role in deciding the risk factor. If you are in your twenties or thirties, then a high risk/high return fund may be suitable. However, if you are in an age group of forty plus, then a low risk/moderate return fund will suit your needs. Whatever type of fund you choose, it is the mutual fund performance that will decide your earnings.

Autor: Albertin Abelmont

For more information on all aspects of mutual fund market and mutual funds investment visit our website for a huge resource of articles features and performance at Mutual funds rating.

Added: October 20, 2009
Source: http://ezinearticles.com/

Commodity Mutual Funds

If you are interested in commodities than investing in a commodity mutual fund can be a good option for you. Especially if you are new to investing and don't want to take too much risk in commodity investing than you can always think about investing in a good commodity mutual fund.

21st Century belongs to the commodities. Last year in 2008, you must have observed how the prices of various commodities had skyrocketed. What could be the reason? As the global economy expands and new countries enter the list of emerging markets, the demand for raw commodities will skyrocket. Supply is finite so this will push the prices of the commodities sky high.

There are experts who believe that the secular bull market in the commodites is already underway. Secular bull markets are supposed to last for a few decades. This makes commodity investing something to be not missed by serious investors. Many commodities are traded through futures contracts.

But for new investors trading commodity futures can be risky so the better bet is to invest in commodity mutual funds. Now, you must be knowing this that mutual funds are barred by law to avoid risky investment strategies. So mutual fund investment is considered to be less risky.

How do you find a good commodity mutual fund? Use the best resource on mutual funds: MorningStar. Go to the MorningStar website, you will find a lot of useful information about mutual funds, the latest news, informations about fees and expenses and so on. Morningstar has got a five star rating system that is considered to be excellent. So by visiting the MorningStar website, you can make a list of top five commodity mutual funds in the market.

Now make a list of questions like who manages the fund, what is the track record of the mutual fund, what are its fees and expenses, what securities does the fund invest in, what are the investment objectives of the fund, what are the risk involved in investing in that fund and so on. You can get some of this information by reading the funds prospectus. Good news funds love to send their funds prospectus free.

So after making a list of top 5 commodity mutual funds, you can read the funds prospectus and further narrow down the list to make your decisions about the best commodity mutual fund that fits your investment needs and objectives!

Autor: Ahmad A Hassam Ahmad A Hassam
Level: Platinum
I loved my time at Harvard University. It is a great place. I like sports. I am interested in internet marketing, article marketing and things ... ...

Mr. Ahmad Hassam has done Masters from Harvard University. If you can read an email than you can easily print cash with these Forex Signals. Learn Commodity Trading! When you visit the blog, don't forget to download your FREE EVIL GENIUS TRADING KIT by Mark Soberman. Don't worry it is 100% safe and legal. You just need to get out of your comfort zone!

Added: October 19, 2009
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Understanding the Benefits That the Child Trust Fund Provides to Astute Savers

Heard about the Child Trust Fund? A remarkably small number of parents appear to realise that all infants receive a free 250 pound voucher from the government to put into a Child Trust Fund.

Your son or daughters voucher may be invested in any one of three types of CTF account, Stakeholder - a shares-based account that swaps into cash, a savings account or a shares account. It is a superb chance to save for the future life of a young person. There are a number of authorised providers of the Child Trust Fund who can be contacted for information on how the scheme works.

The Government is very keen for the public at large to have access to Stakeholder accounts and this is the type of account that we offer. One of the highlights of saving for children is that anyone - parents, grandparents, aunts and uncles or even friends - may add to the Fund to a top limit of 1,200 pounds per year to help boost the total (once added, this money is not allowed to be withdrawn).

Only infants whose birthday is on or after 1st September 2002 are permitted to start up a Child Trust Fund. If you have children born before the above-mentioned date who are not qualified you could consider saving for them with a Child Bond - it is a tax-free savings plan looking for long-term growth.

As any mother or father will without doubt confirm, investing for a son or a daughter is a sound and sensible means of preparing for whatever tomorrow may bring.

Autor: Richie Robertson

Richard Robertson is an experienced financial advisor who specialises in savings and investments.
Child Trust Fund

Added: October 17, 2009
Source: http://ezinearticles.com/

Best Mutual Funds to Invest In - Index Funds

One of the most popular investment choices today are mutual funds. Mutual funds have continuously become more popular and investors continue to show their confidence towards this type of investment as they continue to invest more year by year.

Although there are many types of mutual funds available in the market today that represent various types of commodities one of the most popular types of funds is index funds.

Although there is not concrete definition of what an index fund is what defines them is that these funds invest in large cross sections of stocks and securities. These investments are selected in such a way as to attempt to match one of the popular stock indexes' returns. In other words, these funds are set up in a way to match the Standard and Poors 500 of various stock market indexes.

There are several advantages with investing in index funds. The first advantage is that generally, the average expenses of index funds tend to be lower because index funds do not require active management. Less cost translates into more profits for the investors.

These funds save money because there is no one actively pursuing trades constantly. Funds buy and sell constantly and what is bought and sold under the direction of the manager, which generates costs to go with such transactions.

Index funds can be managed passively with the use of technology and thus limiting the role of management to crucial decisions. The fund transactions are mostly computerized so that specialized software is used to choose the stocks to match the return of the index, eliminating excess trading on behalf of the fund's management.

Investing in index funds offers a bit of security to the investor who enjoys the benefit of lower fees as well as a smooth performance. As long as markets are going up your investment will indeed go up too.

Autor: Gus Smitherson

When it comes to investing you should take in consideration the advice of Investment Advisor. You need to find someone in your area though. If you live in Toronto then you should find an Financial Advisor Toronto.

Added: October 16, 2009
Source: http://ezinearticles.com/

When NOT to Use Index Funds

Summary: There are still some mutual funds that outperform, and you can grow wealthier by using them instead of index funds. You just need to know what to look for.

You have heard here in the past, and from most of my counterparts, that index funds and ETFs are the way to go, and to do otherwise is a fool's errand. Index funds have lower costs, and will beat the majority of mutual funds over time.

There are myriad reasons why most mutual funds underperform. The fact is, mutual fund companies are primarily asset gatherers. They do not benefit from outperformance, unless it gains them assets. They only get revenues from assets under management, not their performance. Investors being the herding animals that they are, if a fund outperforms most years and then has a bad year, money will pour out of the fund like a leaky bucket. The CEO, being a good businessman (or woman), will recognize that the most profitable way is to try and immunize the fund from underperformance. The solution is to make sure that your fund keeps up with your competitors. For example, if the rival funds are piling into energy stocks, you had better have the same exposure, or risk being left out. In the end, funds mimic each other so that they don't risk losing clients.

Also, financial advisors are more concerned with keeping their clients in the correct Morningstar style box for diversification than in creating the highest possible terminal wealth. That is why the best managers that go anywhere for returns are penalized by Advisor Joe, CFP who is only concerned with whether a fund can be labelled large value or large growth. Advisor Joe would much rather put you in a bloated, underperforming fund with a static mandate than an outperformer that disregards style boxes.

How can you profit by this? Look for these characteristics:

DO NOT USE massive, bloated funds. If a manager outperforms frequently, and their fund increases in size from a few hundred million to 10+ billion dollars, the fund is much less likely to outperform (i.e. Fidelity Contrafund). The smaller the fund, the better.

Look for funds that are not "closet indexers." If it performs like the benchmark index every year, disregard.

Find funds with a history of outperformance. The best managers, regardless of style, outperform over longer timeframes.

Select managers that are not concerned with fitting a particular style box and invest based on a theme, such as future inflation.

Do you want an example? Hussman Strategic Growth picks quality stocks that the manager (Hussman) believes will outperform. Then he hedges the portfolio (incrementally removing the stock market risk) based on his views of how cheap or expensive the stock market is at the moment. If stocks are cheap (based on historical average valuation) and the market has positive momentum, there will be little or no hedges on the portfolio. If stocks are expensive and the recent market action is poor, the portfolio will be fully hedged.

Another example is CGM Focus by Ken Heebner (underperformed in this bear market, but overall a good fund) that doesn't correlate highly to the stock market.

Just remember, if you want a solid portfolio without much effort, just use indexes and forget about it. But if are willing to put forth the effort, there are opportunities in mutual funds.

Autor: Don Swanson Don Swanson
Level: Basic
Don Swanson is the pen name for the editor of RetirementSavior.com, a blog about investing tools to help you retire early. Don is an investment ... ...

Don Swanson is the pen name for the author of RetirementSavior.com, a blog about investing tools and personal finance tips to prepare for retirement. Don thinks the convention investment thinking is outdated, and shows on his blog ways to outperform the market with less risk. Visit his site today at http://www.retirementsavior.com

Added: October 11, 2009
Source: http://ezinearticles.com/