This preview shows pages 1–2. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: What Is A Mutual Fund? A mutual fund is a pool of investments used to invest in a large diversified portfolio of securities that will be managed by a professional management. An investor in a mutual fund is a shareholder who buys shares of the fund. Each share represents a proportionate ownership in all the funds underlying securities. The securities are selected by a professional investment manager to meet a specified financial goal, such as growth or income. Mutual funds make saving and investing simple, accessible and affordable. The advantages of mutual funds include professional management, diversification, choice, liquidity, convenience and ease of record keeping. Fund managers typically invest in a variety of securities seeking portfolio diversification. A diversified portfolio helps reduce risk by offsetting losses from some securities with gains in others. The average investor would find it expensive and difficult to construct a portfolio as diversified as that of a mutual fund. Mutual funds provide an economic way for average investors to obtain the same kind of professional money management and diversification of investments that is available to large institutions and wealthy investors. Types of investment funds: Since the main objective of investment funds is to increase the capital value of shares of the Fund, the methods used to achieve this goal vary according to the nature of each fund. Where many of the foundations for the classification of investment funds, including the following: First - on the basis of the funding structure: Mutual Funds Closed-end Investment channels are restricted to a selected group of investors, which is the issuing of a fixed number of documents (units) are distributed to investors each according to his share. And put these funds to subscribe to them if their investment experts found that there is a good opportunity available to invest in a domain. For these closed-end funds usually target a specific and limited period, after which the fund is liquidated and the proceeds distributed to investors. According to the system, these funds may not be to the owners of these documents a refund, and the management of the Fund does not normally buy them, and the only solution to get rid of them is sold in the market . Investment funds Open-end Funds are those that stay open for entry and exit without specifying the volume of financial resources invested, nor the number of documents (units) exported them. The investor can buy units of these funds when he wants, and can sell whenever they wanted after the short notice, as the administration of these funds to be willing to buy back issued a document if one of the investors in the disposal of partially or completely....
View Full Document
This note was uploaded on 04/04/2012 for the course AASTT 24 taught by Professor Khlilaburass during the Spring '12 term at Arab Academy for Science, Technology & Maritime Transport.
- Spring '12