Frequently Asked Mutual Fund Questions
Posted by: Bill Dick in Wealth Building, tags: Wealth BuildingMutual funds are so popular nowadays that there are actually more mutual funds available than there are stocks of individual companies. Below we present some of the most popular questions about mutual funds along with some short answers to the questions.
How Long Have Mutual Funds Been Around?
The Wellington Fund, made up of both stocks and bonds, was started in 1928. However, the Wellington Fund was preceded by investment trusts (which is what mutual funds are technically) all the way back to the early 1800s in the Netherlands. Other funds were started in the United States in the later 1800s.
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?
A “load” is a sales fee charged when you buy or sell a mutual fund - the fee is charged by the mutual fund company. A no load fund is one that does not carry such a sales fee.
What Makes 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.
Index Funds - What Are They?
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. Most investors are probably best off in the long run buying an Index Fund.
What Is Net Asset Value?
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?
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. A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission.
