Questions and Answers About Mutual Funds
Mutual 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?
Many retirement accounts use mutual funds as their primary investment vehicle. IRAs were authorized in the United States in 1975 - IRA stands for Individual retirement Account. IRAs have led to explosive growth in mutual fund investing.
What Does No Load Mutual Fund Mean?
No load funds are mutual funds that don’t impose a sales fee on the investor when they buy or sell the fund. A sales fee that is charged by the mutual fund company is called a “load”.
What Exactly is a Mutual Fund?
A mutual fund is a group of stocks or bonds that are bought together - individual investors buy shares in the fund instead of the individual securities. You become a shareholder of the mutual fund instead of the individual stocks when you buy shares of a mutual fund.
Top Mutual Fund Questions Of 2008 - What Is 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. Most investors are probably best off in the long run buying an Index Fund.
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.
What Is A Public Offering Price?
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.