Funds.docx - Funds 1 Mutual Fund \u2013 pool of investors get a bunch of money and investors get a certain number of shares proportional to their

Funds.docx - Funds 1 Mutual Fund u2013 pool of investors...

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Funds1.Mutual Fund– pool of investors get a bunch of money and investors get a certain number of shares proportional to their contribution a.Expenses you would have to pay: expense ratio (they collect a certain % of assets for a management fee) - a <1% expense ratio is bestb.Front-loaded funds: sales commission; you have to pay a certain amount instantaneously as a charge to get into the fundi.Could also have to pay the load at the end, or throughout c.2 Types of mutual funds:i.Open-ended: when you buy shares in a mutual fund there is no limit to the number of shares bought and anyone can cash out – means that management has to carry a lot on handii.Close-ended: everyone buys a lot of shares at the beginning, and then no one can buy any more, when you want to sell you have to sell to other people2.ETF– indexes that track the progression of a certain industry, or could even be an index of an index; XOP is an ETF3.Hedge Fund
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