What is a mutual fund

What is a Mutual Fund?

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What is a mutual fund?, You’ve often heard about the mutual fund. Yes, mutual funds are one of the instruments of investment being loved lately.

What is a mutual fund? How did the system work? What are the different types?

What is a mutual fund?

The Working System Is The Mutual Fund

mutual funds in united state

A mutual fund is a container to collect your funds or capital which originally from investors, and invested in the form of portfolio investment.

Authorities of the capital invested into the shape of a portfolio done by an intermediary company called investment manager.

Investment Manager here on duty to do maintenance to capital that has been collected from investors, then put it in securities such as stocks, bonds, money markets and so on.

The period of mutual funds offered itself is divided into two, namely, short term and long term. Investors can choose a period where investment where appropriate to the circumstances of him before investing.

Investors will get a profit through dividend distribution or interest that has already been published.

The wealth obtained by compulsory funds stored on the custodian bank is not affiliated with investment managers. This custodian bank will act as a place of collective care.

The investment manager will get a fee that is calculated based on the percentage that has been determined by the value of the assets. Usually, this percentage is listed on an open mutual fund prospectus which can be read by all potential investors.

The History Of Mutual Funds

mutual funds to invest in

The first published mutual fund called the Massachusetts Investors Trust on March 21, 1924, in the United States, with a total value of which was the US $392.000 owned by 200 investors.

In 1929, the value of investment stocks fell resulting in the growth of mutual funds slows down bandwagon.

This incident gets a response from the American Government finally issued the rules about this stock, making it appear the Securities Act of 1933 (Securities ACT of 1933) and the Securities Exchange Act of 1934 (Exchange Act 1934 Shares).

With the publication of the rules, information about the management of the funds of its own to become more transparent.

Return to public confidence towards mutual fund investment is making it steadily grew until at this time.

Types of mutual funds With the understanding

There are five types of funds you need to know. All five have characteristic risks and different periods of time.

Want to know? the following is an explanation of each of the types of mutual funds:

1 Mutual Fund Shares

The stock mutual fund is an investment that is recommended for people who are already familiar with the investment world shaped portfolio.

About 80% of the portfolio is managed into effect is both equity (shares).

The type of investment that this one is not recommended for people who are still novices, because his success will be felt if in the long run.

This investment has a large number of opportunities, but it certainly has a big risk too.

In the short term, it could be incurred losses. But the time was up to long-term gains will be achieved, in large numbers.

2 fixed income mutual funds

A fixed-income mutual fund is an investment in the form of the effect of debt. With this investment, the investor will receive a nominal fixed income with each period features.

Surely this is more suitable for people who are still novices in investment funds. People who are still novices tend to choose this opportunity because of the loss of mutual fund shares.

The advantages of fixed income mutual funds are also smaller than the mutual fund shares. Beginners who have time and enough money can choose funds with risk are not too large.

3 mutual fund Mix

Mutual fund mix is a combination of mutual funds and mutual fund shares. That he did, in the form of investment effects of debt and equity as well.

This one kind of mutual fund can serve as an alternative choice to invest in securities. By selecting the mixed fund, investors can potentially earn larger profits if compared to mutual funds.

However, when compared to the stock mutual funds then the chance of smaller profits. Surely the risk of losses when taking investment funds this mix of mutual fund shares.\

4 money market mutual fund

The money market mutual fund can be used as an option for people who want to invest in the short term in less than a year.

Surely this time period is very short for the size of an investment in futures.

Various forms of mutual funds as this one is usually the SBI as well as deposits.

The level of risk of an investment that one is indeed the lowest when compared to other types of mutual funds are already mentioned above.

This low risk is directly proportional to the income received by the investor, where profits are also not great.

5 mutual fund Index

Mutual fund index is one of the types of investments are managed passively.

Management of passively making did not participate in the sale that is in stock.

The profit or loss that would be obtained by the investor is usually in line with the index that the difference is small.

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