Investing in mutual funds
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Summarize the concept of mutual fund investing. Include an explanation of the types of mutual funds, sales loans, open-end vs. closed-end funds, and the reasons why investors choose mutual fund investing over other alternatives. Be sure to mention expense ratios and include a brief analysis of the potential risks and rewards of mutual fund investing.
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Solution Summary
This solution proivdes an explanation of the types of mutual funds, and information on which mutual funds to invest in.
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Hello. I provide the following to assist you.
Concept of mutual funding:
The concept of mutual funds is that many investors place their money in a pool together, all who have similiar financial goals in mind. The investors that put money in the pool receive units. The money that is collected from the investors is invested into shares and other securities by the fund manager. The fund manager realizes gains or losses. Any capital gains are losses are passed to the investors.
Types of mutual funds:
In reference to types of mutual funds, I provide the following:
"Open-end Funds: Funds that can sell and purchase units at any point in time are classified as Open-end Funds. The fund size (corpus) of an open-end fund is variable (keeps changing) because of continuous selling (to investors) and repurchases (from the investors) by the fund. An open-end fund is not required to keep selling new units to the investors at all times but is required to always repurchase, when an investor wants to sell his units. The NAV of an open-end fund is calculated every day.
Closed-end Funds: Funds that can sell a fixed number of units only during the New Fund Offer (NFO) period are known as Closed-end Funds. The corpus of a Closed-end Fund ...
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