Top Mutual Fund Questions for
There are many frequent questions that are common about mutual funds. This is probably because mutual funds are so popular these days that many people are already investing in funds or are at least thinking about it. Below are some questions and answers: Top Mutual Fund Questions Of 2008 - What Is The History Of Mutual Funds? The Wellington Fund, made up of both stocks and bonds, was started in 1928. However, the Wellington Fund was preceded by investment trusts (which is what mutual funds are technically) all the way back to the early 1800s in the Netherlands. Other funds were started in the United States in the later 1800s. Top Mutual Fund Questions Of 2008 - What Is An IRA? In 1975, a provision was added to the Internal Revenue Code that allowed individuals already in a corporate pension fund to contribute up to $2,000 per year to a Individual Retirement Account.
This was by far and away the largest contributing factor contributing to the growth of mutual funds over the last 33 years. Top Mutual Fund Questions Of 2008 - What Is A No-Load Fund? No load funds are mutual funds that don't impose a sales fee on the investor when they buy or sell the fund. A sales fee that is charged by the mutual fund company is called a "load". What Makes a Mutual Fund? Mutual Funds are pooled investment trusts - the fund buys shares of stocks and you as the individual investor buy shares of the fund instead of the individual stocks.
Index Funds - What Are They? This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor's 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks. What Is Net Asset Value? For most of the 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. Net Asset Value (NAV) is the value of a share in a mutual fund and is calculated by dividing the total value of the fund, less the fund's liabilities, by the number of shares currently issued and outstanding. What Is A Public Offering Price? A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only 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 different classes.
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