Essay on Mutual Funds

Topics: Mutual fund, Investment, Hedge fund Pages: 2 (758 words) Published: January 22, 2013
A mutual is a kind of investment-company that combines money from many investors and backers and invests the money in bonds, money-market instruments, stocks, other securities and sometimes even cash. A mutual fund in basic terms is a large group of people who lump their money together for management companies to invest. And, like most things in the world, there are fees and commissions involved. Mutual funds are managed by money managers, who capitalize the fund’s capital and try to produce capital gains and revenue for the fund’s investors. A mutual fund’s portfolio is organized and maintained to mimic the investment objectives defined in its catalogue. A mutual fund has many characteristics, which are listed below. Investors and backers purchase shares in the mutual fund from within the fund, or through a broker or fund agent, and cannot buy the shares from other backers on a secondary market such as the NASDAQ stock market or New York Stock Exchange. The amount that investors purchase their mutual funds shares for is the estimated net asset value or NAV per share in addition to any fees that the fund may charge at the time of purpose, such as sales charges, also known as sales loads. Mutual fund shares are convertible, meaning when an investor wants to sale their shares, they sell them back to the mutual fund or to a broker working for the fund at the net asset value less any fees the mutual fund may charge, such as deferred sales loads or reclamation fees. Mutual funds commonly sell their shares on a continuous basis, although some funds will stop selling when, for instance, they reach a certain level of assets under management. The investment portfolio of a mutual fund is typically managed by separate entities known as investment advisors that are registered with the SEC. Furthermore mutual funds themselves are registered with the SEC and subject to SEC regulation. There are many forms of mutual funds, which include index funds, stock funds, bond funds,...
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