Mutual Funds, An Outline Essay

Mutual Funds, An Outline Essay

Length: 1432 words (4.1 double-spaced pages)

Rating: Strong Essays

Open Document

Essay Preview

1. Intro
2. Mutual Funds
a. Definition – pool of money, Open-ended investment company
b. History / Purpose
c. Types: Growth, income, small-, medium-, and large-cap funds, money market, specific sector, industry, or type of security (201), international funds, and Index (202, use as Segway)
i. “After the initial success of the index fund, a variation was created: exchange-traded funds, commonly referred to as ETFs. As the name implies, and exchange-traded fund is an investment company whose shares are traded on an exchange” (203).
3. Exchange Traded Funds
a. Definition – pool of stocks
i. “ETFs originate with a sponsor, who selects the investment objective, determines which securities will be included in the basket of securities, and makes agreements with institutional investors (denominated authorized participants). These authorized participants create the market for ETF when they bring the designated basket of securities to the fund or trust in exchange for one creation unit holder (e.g., 50,000 ETF shares)”. (Romero-Pérez & Rodríguez, 2012, p. 1637)
b. History / Purpose
1. “The oldest exchange-traded fund—the SPDR S&P 500 ETF—turns 20 this year.” (ETF revolution, 2013, p. 10)
c. Types: Same as mutual fund plus…
i. regional “iShares”
ii. Holding Company Depository Receipts (HOLDRS) which maintain a fixed portfolio of about 20 stocks in a particular sector (246)
iii. streetTracks which follow specialized indexes such as REITs or large-, medium-, and small-cap growth stocks.
iv. Leveraged ETFs which aim to magnify daily changes of a tracked index.
4. Similarities
a. Less risk through more diversification
i. “This study examines the substitutability or complementariness of index ETFs and index mutual funds (OEFs) t...

... middle of paper ...

...managers also need to validate their fees and commission. This process is a constant balance.
ii. “ETFs not only made benchmarks investable, but ETFs offer more transparency at a lower cost. Many mutual fund managers feel threatened by ETFs, because they are attempting to offer the same value proposition as the ETF” (Vasan, p. 1)
iii. “We believe that ETFs will continue to grow for a variety of reasons. Many traditional, long-only mutual fund managers will continue to struggle to beat their benchmarks, which will continue to push the marginal dollar to ETFs.” John Lunt, president of Salt Lake City-based money management firm Lunt Capital Management (aqi Vasan, p. 6)
7. Conclusion
a. Will see gradual shift of investors to from mutual funds to ETFs.
b. Will see investors duplicating efforts using both mutual funds and ETFs to beat index or benchmark performance

Need Writing Help?

Get feedback on grammar, clarity, concision and logic instantly.

Check your paper »

Indian Mutual Fund Industry : An Overview Essay

- MUTUAL FUNDS – AN OVERVIEW To state in essential words, a typical resource accumulates the store reserves from minimal money related experts, place them in Government and other corporate securities and win pay through premium and benefits, other than capital expansion. It takes a shot at the standard of" little drop of water makes a noteworthy ocean '. An open-end resource is one that is available for enrolment all as the year advanced. These don 't have a changed advancement. Theorists can accommodatingly buy and offer units at Net Asset Value ("NAV") related expenses....   [tags: Hedge fund, Investment, Mutual fund]

Strong Essays
1287 words (3.7 pages)

Essay An Outline Of My Life

- Growing as a Christian and as a firm believer in God, I have an outline of what my future would be like and how I would like to die. I imagine myself married and a mother of five children. I will be practicing entertainment and civil rights law in the cities of New York, Boston, Atlanta, and Miami. Currently, at the age of 26, I have a 401k, mutual fund, cd’s, three savings, and two checking accounts that I started myself. I plan to continue saving throughout my life until I retire. If it so happens that I die today, those funds will go to my mother and my 12-year-old sister....   [tags: Family, Marriage, Sibling, Burial]

Strong Essays
907 words (2.6 pages)

Evaluating The Performance Of Mutual Funds Essays

- EVALUTATION OF MUTUAL FUNDS: In India, currently, there square measure many of the mutual funds are jointly investment companies operating each within the public sector yet as within the private sector sector. These contend with alternative one another for mobilizing the investment with individual investors and other organizations appetent of inserting their funds with these non-depository financial institution investment company would really like to grasp the comparative performance of every thus on choose the simplest mutual fund or investment company....   [tags: Investment, Mutual fund, Hedge fund]

Strong Essays
909 words (2.6 pages)

Essay on Notes On Types Of Mutual Funds

- Types Of Mutual Funds Learn about the different Types of Mutual Funds in this mutual fund tutorial. Which mutual fund is right for you. Asset Allocation Asset allocation refers to the division of your portfolio to different asset classes such as money-market securities, bonds, stocks and their appropriate subcategories. An asset allocation fund follows this principle by holding several asset categories. One of many Types Of Mutual Funds. Balanced Funds These funds invest in a combination of bonds and stocks of various sorts depending on their stated objectives....   [tags: Investment, Bond, Mutual fund, Stock market]

Strong Essays
1510 words (4.3 pages)

Essay Types Of Mutual Funds : Closed Ended Funds

- TYPES OF MUTUAL FUNDS Closed-ended Funds A closed-end fund has a stipulated maturity period which generally ranging from 3 to 15 years. The fund is open for subscription only during a specified period. Investors can invest in the scheme at the time of the initial public issue and thereafter they can buy or sell the units of the scheme on the stock exchanges where they are listed. In order to provide an exit route to the investors, some close-ended funds give an option of selling back the units to the Mutual Fund through periodic repurchase at NAV related prices....   [tags: Mutual fund, Investment, Hedge fund, Stock market]

Strong Essays
961 words (2.7 pages)

Essay about Index Funds and Mutual Funds

- Personal finance and investing is just that: it's personal. From the day the first shares are bought, for the individual who surmises it's undertaking, the decisions made today will have everlasting impacts on not only the distant future of the investor but the investor's family for generations to come. Combine this with current uncertainty in the stock markets, housing markets and economy and you have effectively driven a wedge between the investor, his income and his family at large. Statistics abound in reference to how poorly managed the majority of American's finances are and it's no wonder with the abundance of securities that are available in today's markets....   [tags: Finance]

Strong Essays
970 words (2.8 pages)

Economic Growth and Mutual Funds Essay

- ... They can invest in investment funds better returns in comparison with the banks. The reason for this is that the people are not aware of the higher returns, benefits, and security by investing in investment funds. To date, mutual funds in the consciousness of the people. As a result of this ignorance people hesitate to invest in investment funds. Individuals should be given information about the features that mutual funds. Mutual funds process can be better understood as a form of a cycle that is below information Portfolio’s, of the taxable to tax-free, and virtually no risk money market funds and high risk options (Jacobs, 2001)....   [tags: savings, investors, securities]

Strong Essays
1784 words (5.1 pages)

Essay on Mutual Funds

- A mutual fund is an open-end investment company that invests money of its shareholders in a usually diversified group of securities of other corporations, as defined in the Merriam-Webster dictionary. Mutual funds help with financing and investing opportunities. They give the small investors a chance to invest their money in other areas besides stocks and bonds. There is multiple mutual funds to choose from and different reasons why shareholders should choose them. As popular as mutual funds have become, there is downfalls to them like most investment opportunities....   [tags: Finance Investment ]

Free Essays
1889 words (5.4 pages)

Mutual Funds Essay

- Mutual funds are an easy, convenient way to invest, without having to worry about choosing individual stocks. A mutual fund can be defined as a single portfolio of stocks, bonds, and/or cash managed by an investment company on behalf of many investors. The investment company 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 all the other shareholders of the fund. The fund manager invests the contributions when shares are purchased, along with money from the other shareholders....   [tags: essays research papers]

Strong Essays
1301 words (3.7 pages)

Mutual Funds Essay

- Mutual Funds, Bill Miller, and Value Trust Value Trust, an $11.2 billion mutual fund managed by Bill Miller III, and one of a family of funds managed by Legg Mason., a leading Global Asset Management Firm headquartered in Baltimore, Maryland has achieved uncanny success. The Fund invests primarily in large-cap equity securities, is benchmarked against the S&P 500, and as of 2005, has outperformed its benchmark for a record 14 consecutive years. This amazing streak has brought much attention to this highly rated fund and what exactly is behind its excellent success and management....   [tags: Business Finance Investing]

Free Essays
709 words (2 pages)