The presentation is designed to give you a general idea about the way mutual funds work. SOme of the aspect that will be covered are what mutual funds are, the growth of mutual funds, why it is a smart idea to invest in mutual funds, etc. The presentation will also talk about the drawbacks of mutual funds after which will be presented the returns one can gain from them. Thre will also be a mention of the types of mutual funds and stocks and bonds in mutual funds. There will also be a section on mutual fund expenses and considerations followed by the holding period for a portfolio. After that there will be a small presentation on mutual fund investment strategies and the concluding point will be a brief on when you should sell mutual funds.
[...] Types of Mutual Funds Funds can be classified according to the type of security in which they invest Stock Funds Taxable Bond Funds Municipal Bond Funds Stock and Bond Funds Money Market Funds Common Stock Funds Most popular type of fund Wide variety with different objectives and levels of risk Growth Industry or sector funds Geographic areas International or Global Equity Index funds Taxable Bond Funds Generally seek to generate current income with limited risk Can vary by maturity Short-term, Intermediate-term, Long-term Can vary by type of bond Government Corporate Mortgage-backed International/Global Bond Index funds Municipal Bond Funds Provide investors with income exempt from Federal taxation Often concentrate on single states to avoid state income taxation as well Stock and Bond Funds Seek to provide a combination of income and value appreciation. [...]
[...] Mutual Fund Investment Strategies If you actively manage your portfolio, consider the past year's funds.” Do not attempt to time the market; timing strategies add little except costs and risk. Use dollar cost averaging by investing a set dollar amount each month. Avoid investing money shortly before the capital gain distribution dates (prospectus). Do not own too many funds. You will get average returns with high expenses. When should you sell a mutual fund? Personal considerations Portfolio rebalancing points due to life cycle considerations Be aware of [...]
[...] Liquidity Funds buy and sell their own shares quickly, even if fund investments are illiquid Diversification Small minimum investment buys a typically well-diversified investment Professional management and record-keeping Expertise and services Why invest with mutual funds? Choice and flexibility Families of funds offer a variety of investments to match investor needs Indexing Some funds track a broad market index which insures that investors will earn the “market return” Increasingly popular mutual fund alternative Mutual Fund Drawbacks Active trading contributes to high costs which lower fund returns Tax consequences can be a disadvantage Tax impacts of asset trading are passed through to investors Tax bill can be large even when the NAV falls Mutual Fund Returns Three sources of return: Income distributions Bond interest, stock dividends Capital gain distributions (CGD) Realized gains/losses from selling assets Changes in NAV (DNAV) From unrealized gains/losses from assets Mutual Fund Returns Return = (ID + CGD –Payments + DNAV)/Beg.NAV Ex. [...]
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