Essay on Notes On Types Of Mutual Funds

Essay on Notes On Types Of Mutual Funds

Length: 1510 words (4.3 double-spaced pages)

Rating: Strong Essays

Open Document

Essay Preview

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.

Closed-End Funds

The opposite of open-end funds, closed-end funds place their shares on the exchange so investors can buy or sell like over-the-counter stocks. Because shares can be traded at discount, NAV, or premium, close-end funds introduce an additional dimension of risk and return.

Convertible Bond Funds

A convertible security gives the holder the right to convert one type of security into a stipulated amount of another type at the investor’s discretion. Convertible Bond Funds invest in bonds that can be converted into preferred or common stock. The benefit is that if an issuing company performs well after the issuance of the convertibles, the fund will be able to gain by converting the bonds into the now-more-valuable stock.

Advantages to Issuing Companies on these Types Of Mutual Funds

Lower interest rate on its debt – The fund is, in effect, substituting the certain stream on interest payments for the uncertainty of the growth prospects for the uncertainty of the growth prospects of company that issues the bonds.
They represent potential common stock – This future common stock feature may be desirable for a firm that currently needs equity capital for...


... middle of paper ...


...stry, such as communications or utilities. The benefit is that investors have higher gains when their sector is performing well. The downside is that sector funds are not diversified and lose value when the sector does poorly. Some sector funds invest in bonds to reduce the risk.

Small Company Funds

These funds invest in bonds and common stock of small companies that have high potential to succeed. The key to reduced risk is diversification among industries.

Total-Return Funds

Total return funds focus on getting the “total-return” on the securities it holds. For bonds this means holding to maturity. With stocks, fund managers use the price/earnings ratio to calculate future appreciation. In options trading, managers focus on dividends, capital gains and premium income.

These are some of the best Types Of Mutual Funds for investors.

Types of Mutual Funds Tutorial

Need Writing Help?

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

Check your paper »

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)

Investment Planning : An Important Part Of Any Financial Planning Process

- Investment Planning Overview It is an important part of any financial planning process. It entails the use of the earnings of an individual to buy assets that would give him or her future benefits in the form of dividends, capital appreciation, interest earnings and or capital gains. These are usually undertaken so that people can earn money sufficient for large purchases or have enough to spend for life events such as buying a car, a new house or marriage. It could also include objectives such as starting a business, saving for retirement and paying for the education expenses of themselves or their children....   [tags: Investment, Bond, Mutual fund, Finance]

Strong Essays
1433 words (4.1 pages)

Mutual Funds, An Outline Essay

- 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)....   [tags: history, purpose, income, funds, money]

Strong Essays
1432 words (4.1 pages)

Notes On Forex Trading Market Essay

- Forex is an abbreviated name for foreign exchange. The Forex trading market is an around-the-clock cash market where the currencies of nations are bought and sold, typically via brokers. For example, you buy Euros, paying with U.S. Dollars, or you sell Canadian Dollars for Japanese Yen. Forex trading market conditions can change at any moment in response to real-time events, such as political unrest or the rate of inflation. The purpose of this article is to give you an introduction to Forex trading....   [tags: Foreign exchange market, United States dollar]

Strong Essays
725 words (2.1 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 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)

An Overview of Mutual Funds Essay

- Mutual Funds - Mutual Funds have become increasingly popular in the last 20 years, with the number of investors rising to 80 million people. This adds up to half the households in America owning mutual funds, with most having a basic knowledge on the matter. A mutual fund is a group of stocks and/or bonds put together, to be invested in as one, and similarly to stocks, investors own shares, which signify a partial ownership on the fund. Making Money off Mutual Funds - Seeing as funds are a collection of stocks and bonds, investors tend to receive dividends on the stocks and interest on the bonds....   [tags: stocks, bonds, profit]

Strong Essays
1197 words (3.4 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)

Different Types of Mutual Funds and Their Investment Objectives Essay

- Different Types of Mutual Funds and Their Investment Objectives Mutual funds are an investment vehicle which pools the money of many investors. The fund's manager uses the money collected to purchase securities such as stocks and bonds. The types of mutual funds vary according to the fund's investment objective. A fund's investment objective will usually seek capital gains, income, or a combination of both. The basic types of funds are described below. The first types of mutual fund I will discuss are “Money Market Funds.” Money market funds seek safety of the principal by investing in high quality, short-term securities....   [tags: Business Finance Investment]

Free Essays
1111 words (3.2 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)