Why Invest in Mutual Funds

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Let us first define the concept of Mutual Funds. These are funds where money is collected from investors to form a common pool and then deployed into various asset classes (equities, debt instruments etc.) to meet some stated investment objective. When you buy shares of a company, it makes you a part owner of the company and its assets. Likewise if you subscribe to a mutual fund you become a part owner of the fund’s assets.

Mutual funds, as an investment option is really advantageous compared to other investment avenues particularly when the capital to be invested is small and the scope for an investor to carry out detailed market research is minimal. The advantages are as follows-

1)Diversification of Portfolio: Mutual funds invest in a well-diversified portfolio of securities. This enables an investor to hold a diversified portfolio irrespective of his invested amount.

2)Diversification of Risk: As investments are made in a well-diversified portfolio, the risk of investing directly in one/two shares or other debt instruments also gets reduced. Any loss in particular companies or sectors gets off-set by gains made in other companies or sectors

3)Benefit of SIP: SIP stands for Systematic Investment Plan. This allows an investor to invest regularly with whatever small amount one can invest, without worrying to time the market.

4)Professional Management: The persons running a fund are professionals who have got the skills of managing the money as well as technical tools and the much-needed research works behind them. So one can be sure that the money is in safe hands.

5)Reduced Transaction Costs: When one invests directly, he has to bear all the costs such as brokerage or custody of securities. Here the mutual funds enjoy

The Many Places Where you Can Mutual Fund Quotes

Mutual fund quotes will help you to understand the ways in which your stock portfolio can be changed for the better. You will see many different financial reviews like the Morningstar even on the internet that can provide you with the information from the day’s quotes.

To find the various mutual fund quotes you need to have an understanding of what these are really like. The way that your stock can be affected by these quotes will need to be looked at too. In the mutual fund quotes you will find lots of information that will help you in every area of your mutual funds.

You will also find the information that is provided about fees and prices that a mutual fund company charges to be very helpful. By knowing these prices you can avoid getting into lots of problems. The mutual fund quotes are constantly changing due to various fluctuations in the market. As a result of this you will not be able to find a consistent quote for each day.

There are many places where you can however receive the current information that you need about mutual fund quotes. The USA.com web site has a section where you can find the day’s quote with the least amount of trouble. To get the stock information that you need you will have to type in the stock or mutual fund name in the window which will access this information. Alternatively you can use the ticker symbol which will also display the mutual fund that you are looking for.

With these types of mutual fund quotes web sites you can find stock quotes for more than one mutual fund or stock. You will also be able to see the how a company’s family stock quotes are doing for the day. There are also various selection boxes where you have the ability of refining your search. With these boxes you can choose to get the information that you need very quickly.

For the investor who needs information about how to diversify their stock portfolio, the mutual fund quote is the best way. By accessing this information you can then choose to spend your money on the stocks that will help you in getting a good profit. The mutual fund quotes are the best way for a new investor to get up to the minute investment tips.

Use the information wisely as you will learn all of the best funds and how to make them work for you. With mutual fund quotes you have the means at hand to make your dreams of wealth come true.

Etfs Vs. Mutual Funds: Miscalculate This and your Porfolio Will Bleed Profusely

If you are still in mutual funds, listen up. Because if you are a reasonable person, you will want to run to the login screen of your online brokerage and look for proof to what I am about to reveal to you. ETFs offer downside risk protection no mutual fund can match.

It is a difference that could cost you thousands in your investment or retirement portfolio.

Okay, maybe you do not HAVE thousands in your investment accounts. If you are just starting to invest your money, pay particular attention my friend. The following page should make your decision between an ETF (exchange traded fund) and a mutual fund clear enough to make an investment decision or take corrective action if necessary.

Here are some basics.

ETFs and mutual funds are similar in that they both hold baskets of securities. A balanced mutual fund can hold bonds, stocks, T-bills and some cash. An ETF is essentially derived from stocks but takes on many forms.

Before I tell you about the potential mistake that could cost you thousands, here are the important differences between ETFs and mutual funds:

Mutual Funds, Guaranteed Investment Certificate or Savings Account?

If you are lucky enough to have a bit of disposable income, you are doing the right thing by researching ways of saving or investing your money. By reading about the different options available to you, you’ll be able to make an informed decision and make the best possible choice for you and your money. How you decide to save and/or invest your money will depend on many variables. Some of these include how much money you’ve got to work with, how much time you’ve got to work with and your all-important tolerance to risk. After reading the brief overview of mutual funds, Guaranteed Investment Certificates (GIC) and savings accounts below, it is advisable to discuss all your options with a personal finance advisor who can assess your situation on an individual basis.
Mutual Funds
A mutual fund is an investment where the money invested by many investors is pooled and then invested in a wide range of investments. The investments typically included in mutual funds include stocks, bonds, securities, short-term money instruments and others. Mutual funds are generally considered to be pretty safe as they are highly diversified. Each mutual fund will have a manger that is charged with trading the fund’s assets regularly. This person’s job is to maximize the rate of return for all the investor’s whose money is invested in the fund. The benefit of investing your money in mutual funds is that you can start with as little as $25 dollars and contribute to your fund on a regular basis. This is a great way to get started in investments and to grow your money even when you do not have access to a lump sum.
Guaranteed Investment Certificates (GIC)
A Guaranteed Investment Certificate, or GIC is a type of Canadian investment in which the rate of return is guaranteed over a fixed period of time. Guaranteed Investment Certificates are relatively low-risk investments, and thus yield smaller returns than that of stocks, bonds and mutual funds. Within the category of GIC’s, there are lower-risk options and higher-risk options; however, GIC’s in general are considered low risk because even if you earn less interest or jeapordize your access to interest earned by withdrawing early your initial investment is guaranteed. These safe and secure Canadian investments earn interest at a fixed rate, variable rate, or based on a market-based index.
Savings Accounts
Savings accounts are very safe and flexible places in which to basically store your money. You can open a savings account at any bank and with as little as $25. You will have access to your money at all times, and depending on how much you keep in your savings account at any given time, may not even have to pay any bank fees. The downside of keeping money in a savings account is that your cash will earn little to no interest. Interest-bearing savings accounts earn very little interest compared to Guaranteed Investment Certificates or mutual funds. However, if you feel that you will (or may) need access to your cash during the short term, this is a great and safe place in which to keep your savings. Many people start saving with this type of account then transfer lump sums to other investments such as GIC’s or mutual funds.
The Verdict
Now that you know a bit more about GIC’s, mutual funds and savings accounts, you are better prepared to talk to your financial advisor about what’s best for you. If you don’t currently work with a financial advisor, speak with a customer service representative at your bank.

No Load Mutual Funds or Exchange Traded Funds (etfs)?

If you are fed up with early redemption charges and ever increasing mutual fund management fees on top of bad-performing fund managers, read on. There is a quiet revolution going on in the no-load mutual fund industry and you, the individual investor, may benefit from it greatly.

I am referring to Exchange Traded Funds (ETFs), which have been around for years, but have grown tremendously since their inception. There are currently over 100 choices with around $10 billion in assets.

In a nutshell, an ETF is a specific kind of no-load mutual fund that you might consider to be a basket of stocks. ETFs are diversified like mutual funds, only they trade like stocks. They are cheap to trade (as low as $8.00) and don’t hit you with any short-term redemption fees. And they offer investing opportunities across the board.

ETFs track every index under the sun including the S&P 500, the Nasdaq 100, The Russell 2000 and many others. Available through any discount broker, they basically fall into one of three categories: broad-based U.S. indexes, sectors and international.

The have esoteric names such as iShares, StreetTracks, HOLDRs and SPYDRs. The difference is in the index they are tracking and the company marketing them. You will see big name companies offering them, like the American Stock Exchange, Barclay’s Global Investors, Vanguard, and State Street Global Investors.

In my newsletter I track the currently most appropriate ETFs for you to consider. For more detailed information you can visit these web sites:

www.nasdaq.com

www.amex.com

www.ishares.com

In addition to inexpensive trades and no short-term redemption fees, how else can ETFs save you money vs. no load mutual funds? One way is on their annual management fees. That fee for ETFs is in the area of 0.45% vs. 1.5% on average for no load mutual funds. The fees charged by discount brokers are so low they almost can be disregarded, usually less than 0.1% of the transaction.

For example, I have used ETFs for some managed account clients during my last Buy cycle, which started on 4/29/03, and paid $27 for a $28,000 order

Creating a Mutual Fund Portfolio

Managing your assets is an important step towards creating your own personal wealth. You can research and figure out on your own which investment products can work for you. Hiring a professional financial advisor can be very beneficial as well. Money market funds are great for short-term investments that need to remain liquid. They earn an average of three times more than traditional savings accounts. If you are looking for long-term investments, consider mutual funds.

There are thousands of mutual funds to choose from, but don’t be discouraged. First find a company that you like. Their policies should be congruent with your needs and your lifestyle. Some charge fees and offer financial advice. Some are fee-free and can offer you education over the phone to help you make your own choices. Just about every company will help you assess your risk tolerance and guide you in the right direction. When choosing mutual funds, you should consider diversifying your portfolio. Use your best judgment and try not to put all of your eggs in one basket, so to speak. There are a few basic categories of mutual funds you should know about before investing in the funds that will best suit your needs.

Some mutual funds are made up of investments in mostly bonds and other fairly stable instruments. These can be great for conservative investors that don’t want to see their balance fluctuating wildly. They concentrate on slow growth and are fairly stable, although you should never count on any investment making money. If you have a few years to wait before you’ll need your money, then investing conservatively may be an appropriate choice for you. You can spread out your money over a few different bond funds to diversify. If you believe that you may need your money sooner, then you may want to stick to very conservative bond funds or money market accounts. They are more liquid and rarely have negative years. Keep in mind that any mutual fund can experience negative years, so consider the length of your investment and what it will be used for before investing.

Moderate funds are made up of some bonds and some stocks. Stocks are more risky and can create a higher or lower return than bond funds alone. Moderate funds can range from being heavy with bonds to being comprised mostly of stocks with a few bonds to stabilize them a little. You may consider moderate funds for longer term investments, as long as you can stomach watching your balance go up and down on a daily basis. Your initial investment isn’t totally safe in any mutual fund, but growth is generally higher in moderate funds if you have many years to invest. Keep in mind that as time goes on, you’ll approach the time when you need your investment. As retirement or your other goals get closer, you may consider moving to a more conservative investment. Any time that you move your money from one fund to another, it is a taxable event. In the year that you move it, any growth above and beyond your initial investment is taxable.

Stock funds are the most aggressive types of mutual funds. They can fluctuate a lot more than other types of funds, either making great profits, or experiencing great losses. These types of funds may look enticing to investors seeking high returns, but keep in mind that the percentages you see are long-term results and can vary greatly from year to year. You should only invest in stock funds for very long-term investments, and only if you can withstand the major fluctuations of the stock market.

When diversifying, keep your goals and risk tolerance in mind. You may choose to spread your investment over many types of funds. Keep track of your investment portfolio and seek professional advice whenever possible.

Tax Planning With Mutual Fund Investments

By nature Mutual Funds are not tax saving instruments but some mutual fund investment products also offers tax saving plans. Generally income that is earned from Mutual funds is categorized under two heads dividend and capital gains. Given that the tax implications can have a significant impact on the return earned it is necessary to understand the tax for both these heads of income. Income earned through dividends is tax free in the hands of the investor. The tax on most occasions is actually paid by the Mutual Fund Company itself. Investors who fall in the highest tax bracket should opt for the dividend option in mutual fund schemes. Capital gains from mutual funds are of two types – short term (1-3year) and long term (more than 5 years). This classification is based upon the period of holding. If the investment is sold within a year 15 days from the date of purchase, any capital gain made would be treated as a short term nature. Hence the tax deducted will be normal. If the mutual fund investment is sold after a year from the date of purchase, any capital gain made during that period will be treated as a long-term capital gain. Here the tax that would be deducted will depend on how long the investment is kept after a year prior to getting it sold. The longer the fund is kept the lesser the tax to be paid.

A Good Fund that could be used to invest upon is the equity linked saving schemes fund (ELSS). They are strong favorites for investing as they provide tax concessions on investments and are also exempt from long term capital gains tax. Apart from ELSS schemes, diversified equity schemes are a good investment considering that capital gains in equity funds below one year are taxed at a rate of 10% and over a year are tax-free. This option can be best exercised using Growth Funds. The primary objective of Growth Funds is to provide investors long-term growth of the capital invested. Dividend paid in Dividend Plans is tax free, and no distribution tax is deducted. However, every time we buy or sell equity shares a Securities Transaction Tax, STT, of 0.25% is paid and further when you redeem your investment, again STT is deducted from your redemption price.

Tax Planning & saving options requires a through study of the market conditions, especially if you are trying to do it in a period of slump. Proper Asset Allocation, research and the advice of the Fund Manager will definitely help. Long term capital loss can be set off only against long term capital gains. Short term capital can be set off against any capital gains, whether short term or long term.

Mutual Fund Expenses - How They Diminish Your Returns

An informed investor knows where his money is going. For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These expenses directly influence the returns and cannot be neglected. The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The mutual fund expenses have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.

Mutual Fund Expenses

An informed investor knows where his money is going. For an investor in mutual funds, it is essential to understand the expenses of mutual funds. These expenses directly influence the returns and cannot be neglected.

The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs: Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.

Get Reviews On Mutual Funds Stock And Investment Banker

A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities. Investing in mutual funds tends to lower the risk factor because they are the result of diverse investments. In order to get the most out of your returns, without paying a high fee, you need to be aware of the different classes of mutual fund stocks and their advantages and disadvantages. Mutual fund classes show the type of stocks covered under each mutual fund. The most common mutual fund classes are A, B, and C. Class A stocks attract lower 12b-1 fees and investing in such stocks makes you eligible to receive discounts. These types of stocks are considered the best to keep your investments for two or more years. Second type of mutual funds stock includes class B stocks which are characterized by their contingent deferred sales charge. Generally, they are suitable for the investors who have limited resources and are looking for long term investments. Small investors prefer these types of stocks because they are not required to pay front-end fees and the deferred sales charge keeps reducing.

Third type is class C stocks which are beneficial for those who are planning to redeem the stocks within a short span of time. This type of stocks is preferred sometimes as you don’t need to pay the front-end fees. However, there are some disadvantages of this type of stocks such as higher MER, zero discounts, lack of provision for automatic conversions and compulsory back-end load etc. Mutual fund companies often charge a higher fee when you opt to invest in high risk high return stocks. So, before investing in any type of stocks, be aware of all these factors. The analysis of the benefits and drawbacks of each class of stocks will help you to select the most appropriate investment option, based on your specific needs and preferences.

Investment Banking is one of the most competitive areas in the banking industry. Many investment banks seek to recruit candidates who are with top results from top universities or business schools. An investment banker has a wide scope for bright career in this field and you get best results in terms of handsome salaries. This is a responsible job, which needs hard work, long working hours, stamina, excellent analytical abilities, good communication skills, aptitude for numbers. Investment banking is composed of different sectors and selection of one of them depends on the interests and capabilities of an investment banker. One of them is corporate finance which includes debt and equity capital, appropriate capital structure, mergers and acquisitions etc. Second is Sales and Trading which needs fast thinking and decision making, good communication skills etc. In this sector, one has to inform the clients about the opinion of the bank on certain assets and markets. Additionally, employees working in the sales and trading department in investment bank need to have a complete understanding of the research produced by their company.

Third one is Research sector in which employees provide information to their clients about up-to-date reports on certain areas of interest. Analysts in the research department specialize in a specific business sector or area, thereby developing reports that can be safely distributed to clients. For entry level investment bankers, a position as a financial consultant is a good way to get board on-the-job training with an investment firm. Typically, entry level investment bankers have to work hard and spend long hours acquiring new clients. So, if you have a great amount of drive, determination and stamina, a career in investment banking could prove to be very lucrative, exciting and rewarding.

Mutual Funds: Good Choice for New Investors

 

If you have been thinking about starting an investment portfolio, but feel overwhelmed by the amount of information you would need to make good decisions, there’s still hope for you. Mutual funds are a good way for a beginner with very little experience or limited funds to get started with investing in the stock market. Here are some of the advantages inherent in mutual funds.

One big advantage is that they can be a low cost way to manage risk, because there is at least minimal diversification present due to the variety of stocks included in the fund. However, you still may need to purchase shares in more than one fund to thoroughly diversify your investments. Some mutual funds only hold stocks in one industry (for instance, pharmaceuticals or energy). Even though the fund would allow you to diversify across that sector by owning shares in several different companies within it, you would not be truly diversified across the market. In that case, a good strategy might be to invest in another mutual fund that is expressly designed to diversify its holdings across several business sectors.

The reason for doing this, of course, is so that you don’t lose all of your money if one sector takes a downward turn. For instance, look at recent occurrences in the residential real estate industry. The downturn in residential mortgage lending affected new home construction as well. So if you owned shares in a mutual fund that was heavily invested in the residential real estate sector, you would be hard hit by the downturn.

If you have limited funds for investing, mutual fund shares can usually be purchased in relatively small dollar amounts, and in even increments. That means you may be able to buy as little as $100 worth of shares. With stocks, you would have to buy in increments of whatever the market price is. That means if the shares were currently trading at $171 per share, you would have to buy them in $171 increments. So if you had $200 available to invest, you could only buy one share.

If you have limited knowledge of the stock market and little or no experience, mutual funds offer the advantage of being professionally managed. That means the manager researches each stock that comprises the fund, so that you don’t have to. However, you still need to do your own research of the mutual fund. You also need to research the track record and experience of the fund manager. But that is substantially less research on your part than it would be if you had to research several dozens of stocks.

 

 

How a Mutual Fund Works

I receive a lot of investing questions, and many of them have to do with mutual funds.

Mutual funds are not supposed to be confusing, but many so-called financial experts have confused us as consumers. A mutual fund is just what it sounds like… a fund that is funded mutually by many people.

A mutual fund usually has a team of managers that buy and sell stocks. The money they use comes from thousands and thousands of people who invest anywhere from $250 and up usually.

When you buy a mutual fund, you are giving your money to a specific team of managers who use it to do what is best for the fund. If you invest in Large Growth, you’re generally investing in big companies that are growing. If you invest in an International fund, you’re investing in stocks and bonds from overseas.

Many times a mutual fund can be as easy as that. Financial experts sometimes have a knack for overcomplicating things and that is where confusion enters the picture.

If you’re interested in learning more about mutual funds, check out the Morningstar Investing Classroom.

Evergreen Mutual Funds Offer Solid Background

There are a number of companies that handle investment for clients both large and small. Evergreen Mutual Funds is one such company. Falling into the mid- to large-size range as far as investment companies are concerned, this company provides its customers with a solid background and a proven track record.

Founded more than 70 years ago, Evergreen is anything but a new comer on the investment scene. This is a selling point with a lot of individuals who view a company’s stability as key for proving ability to successfully manage money.

For those in the market to purchase mutual funds, Evergreen is typically considered a very solid choice. Mutual funds, for those that don’t know, are open-ended funds that aren’t listed for trading on stock exchanges. There are issued by companies that use their money to invest in other companies. The funds sell their own shares to investors and buy back their shares on redemption. This means capitalization is not fixed and shares can be issued as people seek them out.

Mutual funds are very common investment tools for those who want to make money over the short- and long-term. They can match a number of different investment styles and are also used quite regularly in creating retirement funding accounts. Both individuals and corporations are known to invest in mutual funds.

For Evergreen’s part, mutual fund investments have become a backbone of business. The company’s name is meant to inspire a confidence. Evergreen of course translates in some circles as that which is meant to last and remain beautiful.

The Evergreen company is considered one of the top 30 largest asset management companies in the country and it is in the top 20 largest mutual fund families. It boasts more than 334 investment pros on its payroll and has nearly $250 billion in assets under management for individuals and institutions.

The company caters to both private investors and companies that make investments. During the course of its 70 some odd years in business, Evergreen has served more than four million clients. Its calling card is the ability to work with many different types of investors and investments to assist in solid asset management.

With over 4 million individual and institutional investors and a history of innovation spanning more than 70 years, Evergreen Investments offers the strength that comes with experience. This is one of the top things investors consider when choosing what mutual funds to buy into and which ones to avoid.

Evergreen is also an industry leader, having garnered numerous awards for its ability to handle clients’ money wisely. It prides itself on being able to handle a number of different investment styles for different types of clients and tries to meet or beat its clients’ expectations when it comes to returns.

Evergreen has locations in several states, but is available for investors all over the country and beyond. Its headquarters are located in Boston and Charlotte.

When it comes to making mutual fund investments quality service is key in getting good returns. Companies such as Evergreen have made a name for themselves in providing good service and good results for decades.

Reasons to Fire Your Mutual Fund Company - Tax Inefficiency

Mutual fund investors who hold their funds in a retirement account are not affected by this aspect, since income is tax-deferred in most cases. However, if you hold mutual funds in a taxable account, which includes a substantial portion of retirees, you will be doubly surprised this year. First, you will be hit with a tax bill whether or not you sold your fund during the year. To add insult to injury, you may be responsible for a large capital gains bill despite your fund being an overall loser for the year. Second — and few people know about this one yet — the expiration of three year tax loss carryforwards, means that your bill be larger this year than it’s been in the last five. Why? The losses sustained during the bear market of 2000-2002 enabled funds to offset gains in subsequent years. That expires this year. Lipper estimates that the average capital gains distribution is going to increase 50 percent this year (see Boston Globe).

How Did We Get Here?

Whether you are an individual or an organization, the IRS wants its cut of any income from capital gains and dividends. Mutual funds are not excluded. So, when your mutual fund manager sells positions for what you hope is a gain, that gain is taxable, regardless of whether there are offsetting losses. The same is true when a stockholding pays a dividend. For organizations that pass through these gains to the shareholders, the gains are taxable at the individual’s tax rate instead of the corporate tax rate. It is prudent to pass through these gains, since a large percentage of shareholdings are in non-taxable accounts, and few individuals that are in taxable accounts are in a higher bracket than the corporate rate.

You can’t fault the funds for choosing to pass through the gains. However, you can fault them for high turnover in their portfolios. In 25 years, funds have gone from an average turnover of 8 years (meaning that fifteen percent of their holdings are bought and sold in a year) to today’s average turnover of 100 percent. This means that in every year, all stocks are bought and sold. Some of the most egregious offenders turn over their portfolio five times in a year. The mutual fund industry has transitioned from buy-and-hold stewards of corporate America to being short-term, rent-a-stock traders in that time. Although evidence is unclear about why this has happened, the pessimist in me believes that it is because of soft dollar arrangements resulting in an incentive to trade frequently.

Why Should I Care?

High management and expense fees have already made it difficult to outperform their benchmarks consistently. Now, if you take into account that you will have to pay a larger bill to the tax man, that just means your performance suffers even more. If you lose one percent per year to taxes, that amounts to serious money over time. Over a 30 year saving period, this difference amounts to more than 25 percent of your ending net worth. Considering that this could make the difference between you running out of money before you die, it is not to be ignored.

What You Can Do About It

Index funds do not have high turnover. The only turnover they have is periodic rebalancing when their benchmark indexes change. This makes them more tax efficient.

An even better option is to engage First Sustainable to create a so-called Folio. This combines the technology available to a mutual fund to enable you to create your own diversified, asset-allocated mutual fund. You can buy fractional shares of individual stocks. This way, your only tax bill comes when you also do periodic rebalancing to suit your financial situation. To me, this is way more acceptable than swallowing a bill that was based on some conflicted manager’s financial situation.

Understanding Mutual Funds and Unit Trusts

the purchases over a period of time. A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it on their behalf. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The term mutual funds is used in the United States and Canada. In the UK, Ireland, Australia and some other countries they are known as unit trusts. For our purposes mutual funds and unit trusts have been to mean virtually the same thing, but note there are some differences, which should be checked at the time of any purchase. Trusts and OEICs provide a mechanism of investing in a broad selection of shares, thus reducing the risks of investing in individual shares. There are thousands of Unit Trusts and hundreds of OEICs to choose from, so it is important to select the right fund to meet your needs. Unit trusts are open-ended; the fund is equitably divided into units which vary in price in direct proportion to the variation in value of the fund’s net asset value. Each time money is invested new units are created to match the prevailing unit buying price; each time units are redeemed the assets sold match the prevailing unit selling price.  Each Unit Trust has its own investment objective and the fund manager has to invest to achieve this objective. The fund manager will invest the money on behalf of the unit holders (or shareholders). The value of your investment will vary according to the total value of the fund. The trust manager makes a profit in the difference between the purchase price of the unit or offer price and the sale value of units or the bid price. This difference is known as the bid

Here is a Quick Way to Select Successful Mutual Funds

Many investors look only at the track record when choosing a mutual fund. This is a big mistake. The warning that all investment companies give – “past results are not guarantee for further profits” – is there for a reason. Past performance is only one factor that you should consider when selecting a mutual fund.

If you want to pick a really successful fund, you should evaluate a combination of several criterias.

Here is a quick suggestion:

1. Past results. Of course! It’s not the only factor, but remains one of the most important factors. The higher the average yearly results are, the better – if you are ready to accept the higher risks.

2. Longivity. Since how long is this mutual fund in the market? You may think the longer is the better. Generally yes, because it means lower risk. But if you are looking for more aggressive opportunities, consider investing in younger mutual funds.

3. Size. The companies who manage large investment amounts are less liquid. Such funds are usually safer, but can’t offer too high returns. In case of market crash, such funds are unable to cash out fast enough because of the size of their positions. Generally I prefer smaller funds, because they give more opportunities.

4. Company reputation. What do websites, magazines, newsletters and independent advisers say about the company offering the fund? If most people are happy or unhappy, they probably have good reasons for that.

5. Market segment. Is the fund investing in regions with emergning ecomony? If it is specialized in certain industry, what’s the future of that industry? Mutual funds are long term investment – so thing long term when evaluating them.

There are hundreds of factors one should consider when picking a mutual fund. That’s why there are so many companies who provide mutual funds evaluation and even charge for that. But in most cases, considering the five factors listed above can help you enough to achieve good results.

Mutual Funds: Low Risk Yet High Return

Why do we invest money in a particular busines? It is a question that you should answer first before you start any kind of business. Succesful investors always remember to include every detail on their planning activities– and they have answered every vital question that they should address first.

You invest money for profit. Thus, you need to consider investments that can give you a high return. You might consider gambling your capital in a stock market, where every cent can be doubled or tripled, depending on market conditions. Since stocks could be easily acquired and sold, it is one of the viable options that you may consider in choosing an investment portfolio.

However, a high return may also come with high risk. Do you remember the unwritten rule “high risk yet high return” and “low risk yet low return”? It is true that investing in the stock market may give you a huge profit, but expect your capital to be at a high risk. Unstable market conditions might cause you to lose all of your money.

If you do not like taking high risks, the stock market is not an ideal investment for you. You may look for an alternative that could give you the same return but with lower risk than investing in stocks. If you are under this category of investors, then you might consider investing in mutual funds.

Mutual funds are a good alternative for investors who do not want to take the risk when getting a huge profit. It is a “common fund” or amount of money pooled by a group of investors with a definite investment objective. Such pooled money would be managed by a fund manager, an individual who specializes in different types of investments, such as bonds and stocks. He would be the one responsible in managing and investing the pooled money in different securities.

In mutual funds, all profits and losses will be shared among the fund’s shareholders. In other words, all profits as well as losses will be shared among the group according to the percentage of individual share in the fund. For instance, if you are a group of five investors, investing $20,000 each, making your mutual fund to be worth a hundred thousand dollars. All profits as well as losses would be distributed on a 20-percent basis, thus reducing all possible risks.

Aside from the low-risk feature of mutual funds, you need not to be an expert in stocks or other forms of securities. The fund manager would be the one to take care of it. In addition, you can diversify your capital and spread it to other types of investment. Diversification means spreading all of your money into several investments. In case one investment is down, there are other investments that you can concentrate with. Thus, you will not be losing all of your money in a single investment as well as maximizing your potential profit through other types of investments.

The mutual funds will automatically diverse your investment across bonds or other securities. Again, the fund manager would be the one to handle all transactions and determine if it is viable for you to invest on that particular security.

Form a pool of investors and combine all of your capital into a single mutual fund. Share the huge profits out of diversified investments as well as enjoy the reduced-risk feature that comes along with it.

Us Mutual Funds Migrating Overseas

US large-cap mutual fund managers lift foreign equity holdings above 8% The never-ending quest for better returns has led portfolio managers of US large-cap mutual funds to boost their exposure to non-US stocks. We analyzed $780 billion of equity holdings of 90 mutual funds in the Lipper Large-cap Core, Growth, and Value benchmark indices. Foreign stock holdings of large-cap Growth mutual funds range between 0% and 19%. US mutual fund portfolio managers buy European, but avoid Asian stocks On a combined basis stocks in Japan and Asia Ex-Japan account for less than 1% of total equity assets of the average US large-cap mutual fund. A majority of foreign holdings of US large-cap mutual funds is in Europe and North America (Ex-US, Bermuda, Cayman Islands). Foreign stocks enhanced returns in 2005 but not in 2006 A positive correlation existed in 2005 between US large-cap core mutual fund returns and the percentage of foreign equity investments in a portfolio. This correlation broke down in 2006. Invest in 30 stocks with the largest upside to Goldman Sachs Price Targets We identify 10 stocks in each region with upside return to our target prices averaging 30.

The Goldman Sachs Group, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. Customers of The Goldman Sachs Group, Inc. in the United States can receive independent, third- party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at http://www.independentresearch.gs.com or can call 1-866-727-7000 to request a copyof this research. For Reg AC certification, see page 8. For other important disclosures, see page 11, go to http://www.gs.com/research/hedge.html, or contact your investment representative.

How to Find Value in No Load Mutual Fund Investing

What are you thinking when it comes to your no load mutual fund selections? Are you saving pennies and sacrificing dollars?

Are you spending your time looking at expense ratios, analyzing Morningstar ratings and searching for funds with low fees and no 12b1 charges? If you are like most people, you know these things in and out. You’ve spent hours evaluating them, and your chosen mutual funds cost little to purchase and maintain. But they still don’t perform to your hopes and expectations.

So, why is this happening? Because this kind of investing focuses on cost as opposed to value.

Investors with this philosophy have usually interviewed numerous advisors. But instead of trying to find someone suitable with a sensible approach, they only want to know who has the lowest fees. That’s like going to the cheapest auto repair shop and getting the best price, but your car still doesn’t run well.

Then there are the investors who call or email me wanting a recommendation on a no load mutual fund. They want one with no 12b1 charge, but they completely ignore the issue of how the fund might perform.

Both these kinds of investors spend their time trying to save pennies and in the process they are losing dollars. Instead of falling into the penny wise, dollar foolish trap, here are some ideas that will assist you in evaluating the end profit rather than just the short term saving.

1. Shift your focus from penny pinching to looking at the big picture: What can a mutual fund or an advisor do for you, not how much does it cost? Why? If you buy a given no load mutual fund at the right time and it gains a tidy 15% for you over a 6 week period, would you really care about the costs? If a mutual fund

What are the Advantages of Structured Settlement Mutual Funds?

When you have been awarded a settlement due to arbitration or through the order of a judge as a result of a lawsuit, one of the options open for receiving the award is by accepting structured mutual funds. But is this really a smart way to go? The fact is that it can be an ideal way of getting the most from the settlement. Here are a couple of reasons why.
Mutual funds are considered to be relatively safe in most markets. That is not to say that there is no risk involved whatsoever. However, the potential to realize more income from your settlement if it is invested in a mutual fund account is very real. When your situation is such that you do not need the settlement money to handle medical bills or provide revenue to fund home care, it is a very wise move to invest the money in something promises a higher yield than just a standard savings account. If you can manage without having to rely on payments from your settlement to take care of ongoing expenses, this can be a great way to build a nest egg for your later years.
A second advantage to structured settlement mutual funds is that you have some leeway to move the funds around as you experience life changes. This is not true when you are working with a fixed annuity program. There is no way to go back and make any type of changes in your payment structure. If you anticipate some life changes down the road, or even if you don’t but would like to make some changes in the payment disbursements at some point just because you want to, then mutual funds might be the smarter move for you.
Structured Settlement mutual funds are not right for everyone. It is important that you take a long hard look at this option before you agree to anything. To some degree, this means you will need to conduct some research before any firm decision is made. Do not be afraid to ask questions. The goal is to make sure you have what you need to live an equitable quality of life both now and in the future. If you need the money to make that happen now, then by all means set up the payments accordingly. But if you do not have to depend on the payments to meet ongoing expenses, then investing for the future is a smart idea.

Reasons To Fire Your Mutual Fund Company: 12b-1 Fees

The 12b-1 fee is the obscurely-named outrage that dings investors in mutual funds so that management can market the fund. In 1980, the mutual fund industry successfully lobbied the SEC to allow this fee with the justification that a larger fund lowers the expenses for everybody. In theory, the logic is right when you take into account the same expenses being spread over a larger pool of assets. However, there are several problems with this thinking:

1) A larger fund does not necessarily become easier to manage. Over the last 25 years, multi-billion dollar mutual funds have become the norm. When I worked for Fidelity in the early 1990′s, the largest fund in the world at the time, the famous Fidelity Magellan, was around $25 billion. Even then, concerns had set in that it had become too large to outperform the market. Since then, Magellan’s size has been a deterrent. Like a large barge, meaningful changes in its trajectory take too long to implement. Of the funds with in excess of $5 billion, most of them track the S&P 500 minus their outsize fees because that is all they can do. Yet, even these large funds continue to charge the 12b-1 fee.

2) Certainly, if a fund is closed to new investors (which makes the fund easier to manage), the existing shareholders should be relieved of the 12b-1 fee. But, as of November 2003, when the House introduced HR 2420, 139 closed funds still levied the fee. The funds are charging a marketing expense for funds that no longer accept new investors. Huh? Like crack cocaine, fund management firms just became addicted to the stream of poorly disclosed fund fees.

3) A fund is able to call itself “no load” as long as the 12b-1 fee is 25 basis points (.25%) or lower, although many funds charge the max-allowable 100 basis points.

In practice, the 12b-1 fee is partially shared with advisers who tout the funds, and the rest is gravy to the fund firm. They do not disclose this fee as part of their management fee, and even obscure the fee in their overall expense ratio.

Two thirds of mutual funds charge this fee, and I would bet that few investors know about it. HR 2420, introduced by congressman Mike Castle of Delaware, sought to ban this fee for closed funds only, and even that was stalled in the Senate, despite broad bi-partisan support and backing from the white house.

No Load Mutual Funds: Investment Hype Vs. Investment Help

With the internet such a huge part of our daily lives, many investors have access to a wide range of instant investment information.

Whether you’re into stocks, bonds, mutual funds, futures or options, there are tons of electronic investment newsletters offering to turn your small stake into a giant fortune. All you need to do is subscribe and watch your portfolio soar.

Yeah, right!

As a practicing investment advisor specializing in no load mutual funds, I have received my share of e-mails from disillusioned subscribers wanting to know how to better evaluate newsletter services.

While there are no absolutes, I can give you a few pointers that might help you make a better decision:

1. Stay away from the most obvious hype. Ads promising to turn your $10,000 into $1 million in 2 years by buying this incredible stock or hot commodity are not promoting investing

Investing in Mutual Funds Online

Are you thinking of investing some money? There are thousands of different mutual funds that you can start investing your money in, but the question is how do you pick the best one to fit what you are looking for? Or maybe you’re wondering if is the right thing for you to do.

When you are setting up an account over the internet with your online broker, you must first meet three important requirements. Your computer must be able to connect to the internet, your web browser must be at least 128-bit compatible such as Netscape 3.0 or Internet Explorer 3.0 or higher, and you must have at least a small amount of money if not more to start. Some online brokers require that you have as much as $1,000 or the equivalent in securities to open an account.

When investing in mutual funds, you should check around for different accounts that may be available. Some require you to place cash up front and others may not require any cash to open the account. You should do an extensive detailed search to find an account that fits your needs as well as your bank account. Your best research tool is the World Wide Web and it is right at your finger tips 24 hours a day, seven days a week.

are always subject fees and this can be a tricky subject. Brokers charge fees and these can widely differ depending on the broker you choose to go with. Always read the fine print with anything dealing with money exchanging hands. There could be hidden fees or fees for changing funds that are within the same fund family. Some brokers don’t charge any fees and these may be the ones you should look into. There are websites like http://www.globefund.com that can provide you with daily, monthly and historical mutual fund data. You can also view the performance charts of a particular fund and compare funds against each other. This is an easy way to find the one that is best for you.

How to Maximize your 401k Mutual Fund Returns

phoned and asked if I could help him with his 401k. Jack works for a large company as Senior VP of lending and is financially pretty astute. However, when it came to his 401k mutual fund decisions, he had repeatedly made the same mistake most people were making. As a result, he saw his account drop in value substantially.

At the time we were in the midst of the 2000 bear market, which showed no sign of letting up. Jack had purchased into a Lifestyle fund because someone recommended it. By the time he finally bailed out, it cost him dearly. However, he continued to make the same mistake by reinvesting.

He checked with the 401k representative and subsequently switched to a variety of mutual funds ranging from World Stock to Domestic Hybrids, Large and Small Value as well as Growth. But nothing worked and his portfolio value headed further south.

By the time we met to discuss his 401k Jack was pretty disgusted by the canned advice he had received and the continued losses he was sustaining.

Jack knew that I had pretty much eluded the bear market of 2000 by having sold all of my clients’ positions on 10/13/2000. We were safely in our money market accounts weathering out the storm (see my article “How we eluded the bear in 2000.”

Thinking about this, Jack could only shake his head because at no point in the market slide had he ever been given what I believe was the right advice. That is, no one suggested that, since we were in a bear market, he might want to step aside and remain in the safety of his money market account. So he stayed invested, hoping against the evidence all around him to find something that was not crashing. That was his mistake, and one shared by many.

The advice that he consistently and continually received was that the market was close to a bottom, stocks

Reasons to Fire Your Mutual Fund Company - Enablers of Poor Corporate Governance

An entire book could be written about the happy conspiracy between corporate managers and the investment community that pads both pockets at the expense of the everyday shareholder. In fact, one has been written. You should check out “The Battle for the Soul of American Capitalism” by John Bogle, the founder of the Vanguard Group. Bogle has been one of the few mutual fund industry luminaries that publicly decry the abuse taking place. It is an easy read. Check it out. Many of my top ten reasons are touched on in this book.

Over fifty percent of corporate America is owned by the top 100 financial fiduciaries. One would think that this alone would make them the most vigilant voices in the boardroom. In fact, few mutual funds demand accountability from management, and in many of the most egregious cases, they are guilty of downright aiding and abetting the fudging of numbers and the looting of otherwise good corporations. Why? Two glaring conflicts of interest prevent the industry from becoming the activists that they should become.

First, every company is a potential client for 401k and pension administration. Over half of invest-able assets are in defined contribution plans (401k, 403b, etc) or defined benefit plans (pensions). Company management gets to decide who handles these assets on behalf of their employees. Corporate managers who take a dim view of shareholder activism (and who does, except those that are abusing shareholders?) are unlikely to award this business to institutions who meddle too much. Management wants shareholders to blindly follow the recommendations of management. Shareholders who file corporate resolutions and offer up competing board slates are not likely to get a piece of the company’s investment assets.

The second conflict is similar to the first. So many of the mutual fund industry’s parent companies also have operations in investment banking. They are reluctant to raise hay because offending their management clients may result in their firms being left out in the cold when it comes to investment banking deals.

This is really a shame. Mutual funds have the expertise, the resources, and the position to demand accountability from management. Instead, management has used the diffusion of corporate ownership to increase their pay, fudge the numbers, cut sweetheart deals, etc. Bogle calls this a transition from “owners’ capitalism” to “managers’ capitalism”.

Investing In Bonds and Bond Mutual Funds Can Be A Good Deal.

Most people think of investing in Bonds as being a dry subject, and to a degree, they are right. However, boring can sometimes be a good thing, especially when it comes to investments. Too much “excitement” in your portfolio can lead to undue stress, so a diet rich in bonds and bond mutual funds can help smooth out the rough edges in a portfolio made up mostly of common stocks.

Bonds are generally considered to be less risky than stocks, but they are not without peril in their own right. The risk in a bond is directly related to the issuing company, and the type of debt instrument. Depending on the type of debt issued, and what underlying assets are involved, certain bond investments can be as risky or more risky than investing in stocks. But there’s good news: with a higher risk generally comes a greater return.

Bonds tend to be less flexible to trade than common shares, so most individual investors will end up investing a a bond mutual fund. This has many advantages for the beginning investor, not the least of which is that she can rely on the investment experience of a firm that specializes in analyzing the companies, and their capability of repaying their notes.

The biggest risk associated with bonds is referred to as the interest rate risk. This term refers to changes in the market interest rates, which have a direct bearing on bond returns. Fixed-income securities, in general, move inversely with the changes in interest rates. What this means is that during a period of rising interest rates, like the current climate in the
U.S. in 2006, people holding bonds will end up seeing declining bond returns. This will affect long-term issues the most.

In fact, the longer the time to maturity, the greater the risk of interest rate erosion becomes. For this reason, careful pruning of a bond portfolio becomes of greatest interest to the fund manager. One technique bond mutual funds use is staggering maturity dates so that they have less risk based on any one scenario. The great size of the funds allow them to do this easily and quickly.

The biggest risk for any bond holder is the risk that the company will default before making its’ scheduled payments. This is directly related to how credit worthy the company is, and their capacity and will to repay their debts. Companies with lower credit ratings have to pay higher interest rates, just like consumers in the same boat. The worse the credit, the higher the interest rates to bond holders have to be in order to attract investment dollars. Companies with excellent credit ratings pay a much lower cost for capital, which is one of the reasons they have superior credit in the first place!

Whenever considering an investment in a bond, make sure first and foremost that the company has an excellent rating from Standard and Poors or Moody’s. This will ensure they have the capacity to pay back your loan to them over the entire duration of the bond contract.

How (not) to Buy Mutual Funds

When it comes to mutual funds, there is a lot more to success than just finding a good one. Sad investment stories like the following are all too common. I hope my sharing it with you will help you avoid making the same devastating financial mistake one of my former clients made.

This story begins during the height of the investment madness in 2000, just prior to the bear market. I had been managing an IRA account for “Bob” for around six years, with a better than average record of success. So I was surprised when Bob sheepishly called in July, 2000 to let me know he was transferring his IRA account, which had done particularly well during our latest Buy cycle going into the year 2000.

However, his tax preparer, a long time personal friend of Bob’s wife’s, was now also offering investment services, having recently received his Registered Representative’s license.

Fast forward to the end of September. It had become increasingly clear to me that the Bull market had run its course. So, in accordance with the Sell signal from our trend tracking methodology, we sold all of our mutual fund positions on October 13, 2000 and went 100% into money market. (See my article

Reasons to Fire Your Mutual Fund Company - Fresh out of High School

The fudging of expertise is appalling in our business. Believe me, I know. I am 35 years old now, and have been in the financial services business 13 years now. When I was 22, fresh out of the University of Texas with a History degree, my first job was with Fidelity Investments as a mutual fund adviser. I passed the Series 6 exam in a matter of days. After a few weeks of training, most of which was listening to one of the more tenured reps (by “tenured”, I mean someone with six months experience), I was on the phone taking calls from all over the country, advising people on how to take care of their financial future. If you had called an 800 number on a prospectus or an advertisement, you would have been speaking with someone like me. Dozens of reps like me fielded calls, and not one of them had more than three years experience. I, myself, only lasted a year and a half in that job. Call center work has a way of burning you out.

In the 1990′s, Fidelity was undergoing rapid growth, and they could not keep the place staffed. They had planned on staffing to a level where no more than five customers were holding at any given time. Shortly after I arrived, we were constantly on “red alert”, which meant that 30 people or more were holding all the time. So, they relaxed their hiring requirements. They had previously insisted on a college degree for their newly hired reps. Soon, I was sitting next to pimply-faced 18-year-olds who had been in a high school classroom only a few months prior. Looking back on it, who was I to feel so superior? It’s not like I learned how to plan someone’s financial future in my “Western Culture, 1865-present” seminar at UT.

Think about that, though. Customers were entrusting their retirement plans to kids. If you go to Fidelity, Schwab, E