Archive for the ‘Mutual Funds’ Category
For months, we have been saying that investors should stay away from government and investment grade bonds. When cash rich companies like, IBM, Microsoft, Pepsi, Walmart, and McDonald’s can issue debt at yields near or below 1% for 3 years, you have to question the intelligence of the bond market. Finally, this December, it seems as if we got the correction that we have been looking for.
We are now starting to see the beginning of a massive exodus out of bonds and bond funds, and inflows back into the stock market. Bond mutual funds had the biggest client withdrawals in more than two years in December as a the flight from fixed-income investments accelerated.
U.S. bond funds in particular experienced withdrawals of $8.62 billion in the week ended Dec. 15, up from $1.66 billion the week before. The withdrawals were the largest since the week ended Oct. 15, 2008, when investors yanked $17.6 billion from bond funds.
And in spite of the Federal Reserve’s pledge to buy $600 billion in assets to revive the economy, we continue to see a net sell-off in Treasuries as 10 year note yields have jumped to 3.35 percent, up from 2.49 percent.
So, is the bond bubble bursting. We certainly think so. Even at these new levels, yields look desperately low while continuing to carry a whole lot of risk as signs of an economic recovery and a stock market rally increase speculation that interest rates may rise.
Article source: http://ezinearticles.com/5645256
If you are not sure if you will benefit from savings accounts and all the keep your money low type of deals and prefer to get out of your investment with some profits than you probably considered mutual funds as a good starting point. You were right.
Mutual funds are a great pool of money that was gathered from a great number of investors and later invested into stocks, real estate and bonds. No matter what amount of money you invest into funds you will receive a proportional share from the money invested. So if you are still considering funds as an option let’s go over some benefits of mutual funds and why you should invest in them.
First of all the risk is brought down to a minimum. If you gather a certain amount of money you will probably have enough to only invest in one kind of stock, while funds gather money from a great number of investors and lower the risk by investing in various instruments and stocks.
Also they are much easier to work with. When you invest money into stocks you will have hundreds or thousands of stocks to take care of, while you will have only one fund portfolio to deal with. A great benefit to mutual funds is that they are a liquid asset, which means you can withdraw your funds any time you wish. Also a great benefit of funds is that unlike regular stocks for which you would need to invest a minimum of $5,000 or more, you can invest only a few hundred dollars in mutual funds. You can invest as much as you like, there is no need to save up until you reach the bare minimum.
As you can see mutual funds are a great investment that doesn’t require much money to start with and they are absolutely safer than any other investment option on the market.
Article source: http://ezinearticles.com/5641678
Mutual funds are one of the greatest ways to invest any amount of money you have with great security. By now you probably know that these funds are probably the top choice of most people that don’t have incredible sums of money to invest, but they are great for anyone, regardless of the amount of money you have to invest. Let’s see why these are a great investment opportunity and why you should invest in mutual funds.
First of all the risk of investment is lower with these funds than with any other type of stock investment. The diversification of investment makes the risk minimum, and the funds needed to invest are also lowered to a minimum. With regular stocks you need to have $5,000 or more minimum investment, but with these funds you can invest a few hundred dollars.
Another great benefit when investing in funds is that your money is being handled by professionals that will invest in various stocks, bonds and other securities. And apart from having your money handled by professionals you have the right to withdraw your money at any time as mutual funds are considered to be liquid funds.
If you are just staring out with investing mutual funds are perfect for you as they will let you experiment and learn the curbs of investment. You can invest smaller amounts of money and try things out; there is no risk like with investing in a particular stock where you can lose a great deal of money.
If you want you can place your mutual fund investment on automatic disposal. This means that each month or each quarter you will add a preset amount of money to the mutual fund investment. Over time your money will grow much faster and you won’t even have to think about your savings.
These are great for anyone new to the market that wants to increase their savings with a minimum risk involved.
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Mutual funds simply let you collect your money together with that of many other investors, then let a professional manager invest that money across enough investments to avoid it being wiped put by any bad move.
The fund basically, is a corporation with the sole business of collecting and investing the money. You buy shares in the fund in order to be included in the pool. In return, your money will be invested by a team of professionals, who look for stocks, bonds or other assets and then invest the money as wisely as can be.
The team normally charges an annual fee of about 0.5% to 2.5% of assets – plus other expenses. That would mean a deduction of your total annual return. This is understandably the amount you pay in exchange of professional direction and instant diversification – this is the driving force of funds to reach 14,000.
Mutual funds can be categorized into two: load funds are those funds that impose a sales charge – cut or withdrawals of any new income attached to the fund; No-load funds are those that do not have sales charges at all.
There are also what you call open-end and close-end funds. Open-end funds normally sell shares to anyone who wants to buy; basically, they want to invest any new money that the public wishes to put into the fund. The price of the share is determined by the value of the underlying investments and is computed anew each night after the U.S. markets close. Closed-end funds issue a limited number of shares which are being traded on the stock exchange like stocks. The price of close-end fund share can go up or down the actual value of the underlying shares held within the portfolio.
Funds can also be classified according to their investment strategy. Below are brief descriptions of these classifications.
Index funds
Most of us are familiar with the long-term stock performance reports of the Dow Jones industrial average, the Standard and Poor’s 500-stock index, or MSCI World and other broad market indices. Briefly stated, funds based on SP500 will never outperform the market. However, due to its low priced with $2 annual expense for every $1,000 investment as compared with $14 a year that the average stock charges – mutual funds outdo the great majority of actively managed funds over time.
Growth funds
This type of fund invests in company stocks with the potential for faster and bigger capital gains as compared to the overall market, but also drops faster if investors pulled out due to unimpressive predictions.
Value funds
Fund managers who tend to rely more on value, buy shares of undervalued companies. Sometimes, these are mature companies that pay out dividends to shareholders. Those investments that produce profits are also called equity-income or growth-and-income funds.
Sector funds
When funds are focused on a particular sector – for example, technology or finance, this type is referred to as sector and specialty funds. But, investing in this type of fund is risky since sectors are highly volatile in nature.
Others
Due to the overlapping nature of these fund types, there is a need to branch out in order to diversify. Aggressive growth funds, capital appreciation funds, small-cap funds, midcap funds, and emerging growth funds are the type of aggressive funds that provide diversification. But because these types are highly unstable, there are strategies that offer optimum results. One option is to invest it in small companies with modest earnings compared with larger ones but have more potential for gains (and losses). The next option is to invest in high-priced and high-growth stocks. Another is to invest in stocks in “hot” industries – for example health care or technology. Or, you may opt to invest in a number of companies.
International
There are funds that invest outside the country of residence which come in three different types. International funds, normally buy stocks in huge companies situated in stable regions such as Europe and the Pacific Rim. Global funds do similar activities but can also invest within the United States area. Emerging market funds buy stocks in high-risk regions such as Latin America, Eastern Europe and Asia.
Bond funds
Bond funds include term funds, which have either short, medium, or long-term fixed before its maturity. These types tend to separate high-risk bonds known as junk bonds and the safer ones known as Treasury securities; and those taxable bonds against those that are tax-free.
Be reminded of course, that when the market is going down, funds that invest in Treasuries might appreciate and investors herd to the safest investments available. It also holds true when things with the market gaining and during better times, funds invest in riskier bonds such as junk-bonds will also pay off.
Article source: http://ezinearticles.com/5696146
So you want to purchase an investment to secure the rest of your life? Well when picking a fund there are some fundamental things that you need to ask yourself. 1) What is your overall goal/investment objective? 2) What is your timeframe? 3) What is your overall risk tolerance? 4) What is your total overall investment capital?
After answering these basic questions here are some of the fundamental categories to pose when you open your investment account or speak to your native financial advisor who seems to confound you with more information than is necessary to get your retirement or 401k party started. First, when looking at different mutual funds they all are broken down into different categories that have a wide range of investment goals. The one that has moved to the forefront of the investment arena is the “life cycle fund”, with such an easy investment option it basically takes into consideration all of the aforementioned questions and compiles them into a potential “panacea” for the novice investor.
Most “life cycle funds” have low investment expense ratios or management fees(cost to manage the fund), typically high dividend yields (interest payout to the fund and investor) and proven risk distribution based on the timeframe and tolerance of the investor. So if you are looking for a great investment option this is the perfect place to begin a great internet search for these types of investments. Some of the best places to look are at your local investment firms and ask for these potential types of funds. Also ask them how have they performed and what is the background of the fund manager, just as if you were going to purchase a car and you get the “car-fax” as your investment rep about the “fund facts” or do the research yourself. All in all there are some great choices out there and you now have the power to make an informed investment decision. So go out there be wise, go in peace and prosper.
Article source: http://ezinearticles.com/5684744
This is your 2011 stock fund investing guide for beginners, complete with suggested best funds to own. Since it’s a guide to investing for beginners we keep it simple. The best funds might surprise you.
A stock fund is simply a collection of or portfolio of stocks that is professionally managed for its investors. Stocks are also called equities, and the funds that invest in them are often labeled as equity funds. The best funds for you in 2011 could be those that are actively managed in an attempt to beat their benchmark and their competition; or the best funds could be the passively managed INDEX variety that simply duplicate an index, which is their (and the competition’s) benchmark. That said, our investing guide now divides funds into 9 basic types based on the equities (stocks) held in their portfolio.
Are the equities held large-cap, mid-cap or small-cap stocks? Are they value, growth, or a blend of both in nature? That gives you 3 (large, mid-sized, or small) times 3 (value, growth, or blend) basic types. For example, as a basic guide to investing for beginners: your best funds if you want to keep it simple and own just one are the LARGE-CAP, BLEND type. These invest in LARGE companies (in terms of market cap or capitalization) like GE, IBM, and EXXON – each of whose shares outstanding are worth well over $5 billion in the market. They also invest in a BLEND of both VALUE issues that they think are selling cheap, with good dividends… and GROWTH stocks that pay little in dividends but are expected by analysts to rise in price significantly in a thriving economy.
If you are a risk taker and want to speculate that the economy and corporate profits in 2011 will grow beyond expectations the best funds for you are the riskiest of the 9 types: SMALL-CAP GROWTH funds. They hold equities in small companies that pay virtually no dividends, but are often the best performers in a good market. Now I’ll guide you back to the investing basics. Most stock funds are actively managed in an attempt to beat an index like the SP 500, which is likely their benchmark for performance. Few succeed consistently. Problem: higher management expenses are passed on to you. Second problem: most of them sell through middlemen and this usually results in about a 5% sales charge that you pay upfront, off the top when you invest.
Now our investing guide gets more specific about the best funds for most people. We’ll assume you want to keep it simple and not swing for a home run with the bases loaded. You want both dividends and rising stock prices in your portfolio, and would like to see names like Apple, Wal-Mart, and Dupont in there, too. Plus, you don’t want to pay extra for active management that might not produce good results. Your best stock funds are LARGE-CAP, BLEND INDEX funds. The best example would be an SP 500 Index fund, where you own a piece of America’s 500 largest and best companies.
Getting more specific, make sure you go with a NO-LOAD version. No-load means no sales charges. Index fund means no high yearly expenses. Now you’ve got the best funds because they never under perform their benchmark, and they cost much less than average to own. That’s it – your basic 2011 stock fund investing guide for beginners – in 600 words or less. Your best funds: no-load, large-cap, blend, stock index funds.
Article source: http://ezinearticles.com/5715539
Are you earning money in bagfuls planning to invest but have no time to research the best available options to choose correctly? Are you expecting a superior treatment of your wealth for your investments? The answer to all your investment anxieties is portfolio management services (PMS).
In today’s complex financial market, every individual investor has their own specific financial needs that are based on their risk appetite and financial goals. But regardless of this, every investor wants to maximize his return on investments with capital protection. This requires management of investments professionally to achieve specific investment objectives, relieving investor from the day-to-day administrative hassles of investments. In India, all major brokerage firms, asset management companies and independent experts provide pms services to clients.
Taking into account, the unpredictable nature of the share market, a strong expertise and strong research is required to make the right decision. Portfolio management is not an easy task as it involves juggling between the limited choices at hand with twin requirements of adequate safety and sizable returns. Because managing investments in equities requires time, knowledge, right mind-set, experience and constant monitoring of stock market, an expert called Portfolio Manager is needed to help manage your investments. He advises, manages and administers the securities and funds on behalf of the entrusting client. These managers use their combined talents and experience to build up the portfolio of investments with an endeavor to bring out the best in it keeping your risk appetite in mind. Thus your investments are always under the guidance of experienced fundamentally sound experts.
What is PMS?
It is the art and science of making decisions about investment mix and policy, matching investments to objectives, asset allocation for individuals and institutions, and balancing risk against performance. In other words, it is a specialized customized service that offers a range of specialized investment strategies to capitalize on the opportunities in the market. Though, PMS is managed by a professional managers, it has potential to address the personal preferences tailored into the investment portfolio giving the freedom and flexibility required for achieving the financial goals. This is typically a high-end product meant for high net-worth individuals (HNI) because it needs some significant minimum investment.
Portfolio management is different from investing in mutual funds. In mutual funds, the investments of various people are pooled together and the fund manager will invest it as a whole. But in portfolio management, the individuality of each client’s portfolio is preserved and it will be tailor-made according to the requirements of the client.
Why Portfolio Management Services?
Today, the financial market is increasingly complex and managing your own portfolio will take up a lot of your time and effort. There are situations when you don’t have time or knowledge to explore the best investment alternatives in the market. This is a common problem faced by many wannabe investors like you. At this juncture, PMS can help you get out of this dilemma. So you can simply assign your investments to PMS who will report to you regularly on your portfolio performance. Don’t feel lost in this complex world of investments. Let the experts do their job.
But why should you opt for PMS? Here are a few aspects on which it scores on top like:-
- Balanced Portfolio: Professional research and advice will help you with information on the best investment options and ideas for your portfolio.
- Maximum Returns, Minimum Risks: PMS assure you of the best downside protection for your portfolio. You will benefit with practical financial advice that can help convert all paper gains into real profits in the shortest time.
- Adjust Your Portfolio To Market Trends: When you avail of these services, you enjoy greater freedom and flexibility to diversify your investments.
- Personalized Advice: Get investment advice and strategies from expert managers.
- Professional Management: Money management services that work for you.
- Continuous Monitoring: You are informed about your investment decisions.
- Hassle Free Operation: High standards of service and complete transparency.
- Greater control: You have greater control over the asset allocation. Here the portfolio can be customized to suit your risk-return profile.
- Transparency: PMS provides comprehensive communications and performance reporting that will give investors a complete picture regarding the securities held on his behalf.
Types of PMS:
There are two types of portfolio management services(PMS):
- Discretionary PMS and
- Non-discretionary PMS
In discretionary PMS, the portfolio manager individually and independently manages the funds of each client in accordance with the needs of the client.
But in non-discretionary PMS, the portfolio manager manages the funds in accordance with the directions of the client. The portfolio manager cannot make buy-sell decisions at his own discretion; he has to refer to the client for every transaction.
Services provided in Portfolio Management:
So you are lured by the sales pitch and entrusted your money to a PMS. What can you now expect from this service?
1. Portfolio managers work as a personal relationship manager with whom the client can interact at any time as per his preference.
2. To discuss any topics regarding money or saving, the client can interact with his portfolio manager on a monthly basis.
3. The client can also discuss on any major changes that he wants in his asset allocation or investment strategies.
4. Portfolio management service (PMS) handles all types of administrative work such as opening a new bank account or dealing with a financial settlement or depository transaction.
5. For online Portfolio management service (PMS), the client receives a User-ID and Password that helps him in getting online access to his portfolio details as and when he wants.
6. Portfolio management service (PMS) also helps tax planning and tax management of client based on detailed statement of transactions in his portfolio.
Conclusion:
Thus if you wish to reap substantial benefits from your various investments want your small pile of investment to grow, the right portfolio management service(PMS) is a prerequisite for it.
PMS is definitely for the moneybags; evaluate it well from several perspectives like expertise, track record and investment philosophy, flexibility, operational efficiency and the fee before you hand over the reigns.
It could end up being a well paying affair if you get this one right. So if you are ready to put your nest egg step into this world, put each step with a fine-toothed comb.
Article source: http://ezinearticles.com/5669679
By
Lyn Bell
Lyn Bell
Level: Platinum
Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. In her role as Financial Planner …
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Mutual funds are professionally managed funds and are a popular method of investing, particularly with investors with smaller sums of money. But how do you identify mutual funds from other investments? Here are some tips to get you started.
- Funds are pooled with other investors. This is the key to mutual funds which are in fact managed funds. The professional managers invest the pooled funds on behalf of investors. Rather than buying a number of shares as when investing in stocks your money purchases a number of units. In this way small sums of money can be invested in a number of different assets, giving you diversification without the need for large sum of money.
- Professionally managed. As already noted the funds are professionally managed by people who are trained in the area of investing. They have the resources and skills to manage your funds on your behalf. This is the manager’s job so they are working daily leaving you to concentrate on things that you enjoy doing. They have constant contact with the markets. This does not mean that all fund-mangers are the best but there are things you can do to check how respected the funds and the managers are through research houses such as Morningstar. Your financial adviser can also help you here.Read the prospectus of the company to find out how disciplined the company is and how it adheres to the strategy that it states.
- A prospectus is available. A prospectus is a legal document that is approved by the country’s Security Commission and shows areas that the mutual fund is allowed to invest in, such as shares and bonds. It provides details of all financial matters relating to the investment option. In New Zealand, apart from the prospectus, you must be supplied with an Investment Statement which has certain questions answered in plain terms rather than investment jargon.
- Most funds are administered by a board of directors and many have trustees who oversee the management of the funds, making sure they are appropriately managed and invested in terms of the investment strategies of the funds. The funds are subject to specific regulatory, accounting and tax rules.
- The funds’ investment objectives define the type of securities in which the fund will invest. There are a range of different types of funds and these can be listed equities or stocks, bonds or fixed interest, cash or money markets. There can be a combination of all asset classes as well, providing true diversification for investors.
Lyn Bell has been in the finance industry for more than 30 years and is a Certified Financial Planner. She has helped many clients achieve their financial goals. Sign up to get Lyn’s free newsletter SoundFinance News and receive a free gift.
Please note this article does not contain specific advice and is for information/education purposes.
A disclosure statement is available free on request.
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Article Submitted On: January 10, 2011
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For most people the best investment for 2011 will again be an investment in mutual funds, and finding the best funds can be compared to shopping for a car. Both funds and cars are a major investment, and both are vehicles designed to take you where you want to go. Here we focus on finding the best funds, because most folks know even less about their mutual fund investments than their car.
Mutual funds are simply investment vehicles or packages of securities like stocks and bonds… that are designed and managed for people who want help managing their investments. The best funds for you will depend on your objectives. Finding your best investment in funds for 2011 will be much like finding your best deal on a car. Every fund states its objective, characteristics, fees and charges up front – like the sticker on a new car. Here are your 4 basic types: stock, bond, money market, and hybrids. Let’s take a closer look under the hood and see if we can find your best investment.
The MONEY MARKET type are your best funds investment if your objective is high safety and high liquidity. They pay dividends that change with prevailing interest rates, do not fluctuate in value, and can be cashed in without fear of taking a loss. For most folks your best investment here is a general purpose taxable variety. If you are in a higher tax bracket, your best money market funds will likely be the tax-exempt variation, where interest earned can be tax-free from federal income tax.
Bond funds are your best investment if you want to earn higher interest income and are willing to take at least a moderate risk in 2011 and beyond. Unlike money market funds, these DO fluctuate in value, and will lose value if interest rates go up. The best funds here to keep risk moderate: short and intermediate-term varieties. Your best funds deal: no-load INDEX funds, where you pay no sales charges to invest and much less than average for yearly expenses. No-loads are like getting a nice discount off the sticker price. Low yearly expenses are like getting the best gas mileage available with the car of your choice.
Stock funds are your best investment vehicle for higher profit potential, and they are also the riskiest of our 4 basic types. In 2011 and beyond the number of investment options may appear overwhelming, so we’ll generalize and keep it simple. The best stock funds for most folks are the general diversified ones labeled as EQUITY INCOME, that invest primarily in large U.S. companies whose stocks pay regular dividends. To give more diversification to your portfolio the best funds to add to the above are diversified international funds that invest worldwide. In both cases the best buy is again INDEX funds of the no-load variety. Why not get the most for your investment dollar?
The fourth type is called balanced or HYBRID funds, because they invest your money in all three of the above areas. Models available might be called target, lifestyle, or asset allocation funds. The best investment here will depend on your risk preference: conservative, moderate, or aggressive. You make your choice and they do the management. In my opinion these are the best investment funds only for folks who want to do one-stop shopping – and are willing to trust that management’s perception of risk matches their own. When you make an investment here your best deal are no-load index funds as well, because some hybrids have heavy charges and expenses.
For 2011 and beyond mutual funds will still be the best investment vehicle for most people and the best funds for you will basically depend on two things. First, your objective and risk tolerance. Second, getting the most for your money. The very best funds (stock, bond, and hybrid) don’t pay salesmen to push their investment products, and don’t pass high management costs on to you. No-load INDEX FUNDS: your best investment in mutual funds.
Article source: http://ezinearticles.com/5678419
In recent times, the popularity of mutual funds has been increasing at astonishing speed. Numerous people are investing their hard-earned money in mutual and slowly but steadily, these are making place in the hearts of masses. They are absolutely easy to use and even people with little or no knowledge can make big money. There are innumerable advantages of mutual fund investing.
The best part of investing money in this is the professional management of investments. Generally, fund managers run this and watch investments on daily basis. It is very difficult to get such a level of money management at any other place.
Secondly, these are popular for their ability of liquidation. At any given day, an individual can sell his/her shares and there will be no issues against such a behavior. One can compare the time taken for the liquidation of stocks as compared to that of these. This benefits investors in many instances.
For instance, if an investor has shares in these and wants to sell them due to impending losses, then he can sell them without any hassles and save himself from undergoing losses, which is not the case in other investment options.
The diversification offered by mutual is yet another benefit of mutual funds. Investing in this field guarantees greater returns in less time. People can earn huge returns by taking small risks. One can invest in different types of funds and bonds at one go, as there are no limitations in these on this front. It is no surprise that people across the world are crazy about mutual funds. One cannot duplicate this sort diversification, as it can be very time consuming.
Another benefit of mutual is that the fees for mutual funds are extremely low, so it may not affect anyone’s pocket. In this manner, people from every strata of society can avail their benefits. Investors can invest in large amount of stocks, which reduces the fees considerably. The greater the money in Mutual Fund Investing, faster there is chance for the growth of these.
Article source: http://ezinearticles.com/5657738