Mutual Funds Explained in Easy-to-understand Language
What are Mutual Funds?
A Mutual fund is simply a collection of stocks and bonds in a portfolio managed by someone on behalf of a group of investors.
Most of these funds primarily invest in stocks and bonds. So firstly you need to know what stocks and bonds are.
Stocks are commonly known as shares - a share is a tiny piece of ownership of a company which has become listed on a stock exchange. A stock exchange is simply a place where company shares can be traded.
Bonds are basically IOUs issued by a company or a government. When you buy a bond you are lending money the government or the company and you will receive interest and your principle (initial investment) back over predetermined periods of time.
Other securities can also be held. These comprise all other types of investments such as real estate, gold, and annuities.
Other names are "pooled funds" and "open investment trusts" or "open-ended trusts".
Management & Ownership
A fund is managed by a company that gets many people to pool their money and then let the company invest it and manage those investments.
Each of these people own shares in the fund sometimes called units. Each share represents a certain percentage or portion of the funds total holdings.
Simply - if 100 people each put the same amount into a fund then each would own a 1% portion of the fund.
Obviously not everyone puts in the same. So the more you put into a fund in relation to the other investors the bigger the portion of the fund you own.
Once you've given your money to the investment fund managers you hope they are able to make money for everyone.
For speedy access to any of the mutual fund information simply click on one of these links:
You are here: Mutual Fund Investing - How funds make money, how you make money from them, explanation of distributions and some special dates. Offshore Investing Mutual Funds - an outline of why offshore funds beat all, and a bit about taxation. Advantages - a discussion of the advantages and the disadvantages of these funds. Types of Mutual Fund - a listing and explanation of all the different types of funds onshore and offshore. Offshore Investments - how to go about making your offshore investment through an offshore trust. Understanding the Mutual Fund Prospectus - an explanation of some of the main things to look for when reading a prospectus. Choosing a Mutual Fund - 6 important things to consider before making your decision to invest in a particular fund. Compare Mutual Funds - how to analyze what the 1 year, 3 year, 5 year and 10 year returns mean, and how to compare funds with those figures.
Mutual Fund Managers - A very comprehensive list in alphabetical order of many of the managers of mutual fund families around the world.
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