5 Replies to “Mutual funds?”

  1. Please withdraw your mutual fund money as soon as possible & wait for markets to foll down. & u can buy good share in bad market for future.

  2. Don’t be crazy.Why waiting for NFO!!!!!.Judge your investment after 1year.If it don’t meet the criteria with benchmark indices then sell it immediately and invest the money in different amc.U may invest in Franklin India Bluechip Fund in dividend option. See the performance of the scheme here.
    Otherwise Mutual Fund is best for us.
    Invest wisely.Invest systematically up to the age of 60yrs.
    No one can give u maximum return other than systematic investment plan.

  3. A mutual fund is a form of collective investment that pools money from many investors and invests the money in stocks, bonds, short-term money market instruments, and/or other securities. [1] In a mutual fund, the fund manager trades the fund’s underlying securities, realizing capital gains or loss, and collects the dividend or interest income. The investment proceeds are then passed along to the individual investors. The value of a share of the mutual fund, known as the net asset value (NAV), is calculated daily based on the total value of the fund divided by the number of shares purchased by investors.

    Legally known as an “open-end company”, a mutual fund is one of three basic types of investment companies available in the United States. [2] Outside of the U.S. (with the exception of Canada which follows the US model), mutual fund is a generic term for various types of collective investment. In the UK and western Europe (including offshore jurisdictions) other forms of collective investment are prevalent including unit trusts, Open-Ended Investment Companies (OEICs), SICAVs and unitized insurance funds.


    Massachusetts Investors Trust was founded on March 21, 1924, and after one year had 200 shareholders and $392,000 in assets. The entire industry, which included a few closed-end funds, represented less than $10 million in 1924.

    The stock market crash of 1929 slowed the growth of mutual funds. In response to the stock market crash, Congress passed the Securities Act of 1933 and the Securities Exchange Act of 1934. These laws require that a fund be registered with the SEC and provide prospective investors with a prospectus. The SEC (U.S. Securities and Exchange Commission) helped create the Investment Company Act of 1940 which provides the guidelines that all funds must comply with today.

    In 1951, the number of funds surpassed 100 and the number of shareholders exceeded 1 million. Only in 1954 did the stock market finally rise above its 1929 peak and by the end of the fifties there were 155 mutual funds with $15.8 billion in assets. In 1967 funds hit their best year, one quarter earning at least 50% with an average return of 67%, but it was done by cheating using borrowed money, risky options, and pumping up returns with privately traded “letter stock”. By the end of the 60’s there were 269 funds with a total of $48.3 billion.

    With renewed confidence in the stock market, mutual funds began to blossom. By the end of the 1960s there were around 270 funds with $48 billion in assets. The first retail index fund was released in 1976, called the First Index Investment Trust. It is now called the Vanguard 500 Index fund and is one of the largest mutual funds ever with in excess of $100 billion in assets.

    One of the largest contributors of mutual fund growth was Individual Retirement Account (IRA) provisions made in 1975, allowing individuals (including those already in corporate pension plans) to contribute $2,000 a year. Mutual funds are now popular in employer-sponsored defined contribution retirement plans (401k), IRAs and Roth IRAs.

    As of April 2006, there are 8,606 mutual funds that belong to the Investment Company Institute (ICI), the national association of Investment Companies in the United States, with combined assets of $9.207 trillion USD.[3]

    [edit] Usage

    Mutual funds can invest in many different kinds of securities. The most common are cash, stock, and bonds, but there are hundreds of sub-categories. Stock funds, for instance, can invest primarily in the shares of a particular industry, such as technology or utilities. These are known as sector funds. Bond funds can vary according to risk (high yield or junk bonds, investment-grade corporate bonds), type of issuers (government agencies, corporations, or municipalities), or maturity of the bonds (short or long term). Both stock and bond funds can invest in primarily US securities (domestic funds), both US and foreign securities (global funds), or primarily foreign securities (international funds).

    Most mutual funds’ investment portfolios are continually adjusted under the supervision of a professional manager, who forecasts the future performance of investments appropriate for the fund and chooses the ones which he or she believes will most closely match the fund’s stated investment objective. A mutual fund is administered through a parent management company, which may hire or fire fund managers.

    Mutual funds are subject to a special set of regulatory, accounting, and tax rules. Unlike most other types of business entities, they are not taxed on their income as long as they distribute substantially all of it to their shareholders. Also, the type of income they earn is often unchanged as it passes through to the shareholders. Mutual fund distributions of tax-free municipal bond income are also tax-free to the shareholder. Taxable distributions can either be ordinary income or capital gains, depending on how the fund earned it.

    [edit] Net asset value

    Main article: net asset value

    The net asset value, or NAV, is a fund’s value of its holdings, usually expressed as a per-share amount. For most 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. Open-end funds sell and redeem their shares at the NAV, and so only process orders after the NAV is determined. 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 the different classes.

    Some mutual funds own securities which are not regularly traded on any formal exchange. These may be shares in very small or bankrupt companies; they may be derivatives; or they may be private investments in unregistered financial instruments (such as stock in a non-public company). In the absence of a public market for these securities, it is the responsibility of the fund manager to form an estimate of their value when computing the NAV. How much of a fund’s assets may be invested in such securities is stated in the fund’s prospectus.

    [edit] Turnover

    Turnover is a measure of the fund’s securities transactions, usually in a year, and usually expressed as a percentage of net asset value.

    This value is usually calculated as the value of all transactions (buying, selling) divided by 2 divided by the fund’s total holdings; i.e., the fund counts one security sold and another one bought as one “turnover”. Thus turnover measures replacing holdings.

    In Cananda, under NI 81-106 (required disclosure for investment funds) turnover ratio is calculated based on the lesser of purchases or sales divided by the average size of the portfolio (including cash).

    Turnover generally has tax consequences for a fund, which are passed through to investors. In particular, when selling an investment from its portfolio, a fund may realize a capital gain, which will ultimately be distributed to investors as taxable income. The very process of buying and selling securities also has its own costs, such as brokerage commissions, which are borne by the fund’s shareholders.

  4. Stay ina good fund and keep adding consistently. If you try to time the market you will lose. According to Ibitson you would have to guess what the market will do 75% of the time just to equal the average return of the market.
    If you are geting close to the time you need the funds you would move from stock to short or itermediate term bond funds.
    If you are the type of investor who doesn’t manage your investments you might look at a good Balanced mutual fund. A good Balanced fund that has 60% stock and 40% bonds and fixed income is the Vanguard STAR fund.

  5. Go to mutualfundsindia.com for your research. It will tell you category wise about fund performance. Select your fund as per your risk profile and appetite. Equity MFs are a good bet for the next three years or so.

    please read up before you invest, otherwise its like throwing your money away. If you desire to do that then please send it to me by MO/DD instead!
    All the best, hold on to SBI blue chip for now

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