| A mutual fund is a portfolio of stocks,
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| | of this unit. Open-end funds can have an
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| bonds, or other securities that is
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| | unlimited number of investors or money in
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| collectively owned by hundreds or
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| | the fund. Managers of closed-end funds,
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| thousands of investors and managed by a
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| | on the other hand, decide upfront how
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| professional investment company. The
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| | many shares they will issue and when they
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| shareholders are people who have similar
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| | will sell them. The only way to purchase
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| investment goals. Each fund has specific
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| | shares in a closed-end fund, once the
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| investment criteria, which are spelled
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| | original shares have been sold, is to buy
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| out in its prospectus, the official
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| | them from a current investor.
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| booklet that describes the mutual fund.
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| | Occasionally, open-end funds can and do
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| Investors then know what they are getting
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| | close to new investors, often because of
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| and can match their objective to that of
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| | high cash inflows that cannot be invested
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| a fund. The pooled money has more buying
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| | in a timely manner. They do not become
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| power than one investor alone, so that a
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| | closed-end funds, however, because
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| fund can own hundreds of different
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| | current shareholders can still buy
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| securities. Thus, its success is not
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| | additional shares from the fund company.
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| dependent on how just one or two
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| | When investors purchase a mutual fund,
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| companies perform.
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| | they own a piece of an investment
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| A mutual fund makes money in several
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| | portfolio. They share in the gains,
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| ways: by earning dividends or interest on
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| | losses, and expenses in proportion to the
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| the investments it owns and by selling
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| | amount they have invested in the fund.
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| securities that have appreciated in
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| | At the close of every trading day, a
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| value. You, in turn, make money in the
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| | mutual fund company tallies the value of
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| form of dividends and interest that are
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| | all the securities in its portfolio and
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| passed on to you and the increase (or
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| | deducts its expenses (e.g., management
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| decrease) in the fund's value. The mutual
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| | fees, administrative expenses,
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| fund manager keeps constant watch on
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| | advertising costs). The balance is
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| financial markets and adjusts the
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| | divided by the number of shares owned by
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| portfolio to achieve the strongest
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| | shareholders to arrive at the dollar
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| returns. By owning part of a fund, the
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| | value of one share of the mutual fund.
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| hard work of selecting and monitoring
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| | This value, the net asset value or NAV,
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| stocks and bonds is done for you.
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| | is the price your fund pays you per share
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| The majority of mutual funds available
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| | when you sell.
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| are open-end funds, which are the focus
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