Mutual Funds Essay -- essays research papers

Mutual origins are an easy, convenient commission to enclothe, with kayoed having to worry about choosing individual stocks. A interchangeable line dejection be defined as a single portfolio of stocks, bonds, and/or exchange managed by an garbment fraternity on behalf of many investors. The investment telephoner manages the fund, and sells shares in the fund to individual investors. When one invests in a mutual fund, they become a part-owner of a large investment portfolio, along with exclusively the some other shareholders of the fund. The fund manager invests the contributions when shares are obtaind, along with bills from the other shareholders. Every day, the fund manager counts up the value of all the funds holdings, figures out how many shares ware been purchased by shareholders, and then calculates the net asset value(NAV) of the mutual fund, which is the price of a single share of the fund on that day. If the fund manager is doing a good job, the NAV of the f und will usually hold fast bigger and the shares will be worth more.     There are a couple of ways that a mutual fund can process money in its portfolio. A fund can receive dividends from the stocks that it owns. Also, the fund talent have money in the bank that earns interest, or it might receive interest payments from bonds that it owns. At the end of the year, a fund makes some other kind of distribution, this time from the profits they might make by marketing stocks or bonds that have gone up in price. Unfortunately, funds dont invariably make money. For example, the fund manager could have made some investments that didnt achievement out, sold some investments for less than the original purchase price, and there may be some capital losses.     Most mutual funds invest in stocks, and these are called "equity funds." Some funds specialize in investing in large-cap stocks, others in small-cap stocks, and mid-cap stocks. Lar ge-cap stocks have market caps of billions of dollars, and are the best-known companies in the U.S. Small-cap stocks are worth several hundred million dollars, and are newer, up-and-coming firms. Mid-caps are someplace in between. There are also bond funds that purchase bonds issued by corporations, municipal governments, or the federal government agencies. You can invest in tax-free bond funds, just as you can subvert tax-free bonds, and the interest you earn is exempt from federal a... ...nd some of the advantages and disadvantages mentioned preferably I found a fund that was interesting. The Domini fund only invests in companies that are part of the Domini Social Index. The index excludes companies that derive more than 2% of sales from military weapons, sell any alcohol or tobacco or own interest in nuclear power plants. The stay large-cap stocks are then evaluated according to other social criteria diversity, employee relations, the environs and the product. For example, a friendship may give a lot of money to community organizations but may be rabidly polluting the environment. In a military post like this, the analyst will carefully consider the pros and cons before including the company in the index and in the fund. Investment requirements were also a broker for considering this fund and the Domini fund requires a minimum initial investment of $2,000. However, the company can waive the minimum investment to a mere $25 each month. The fund has been around since 1991 and has had an average annual return of 20.61% for the buy the farm 8 years. It returned 32.99% in 1998 (while the S&P500 returned 28.58%). It invests 25.85% of its assets in technology and is no load.