For income investors who have a longer-term horizon, equity income funds can offer high returns compared to bond or money market funds and can diversify bond-heavy portfolios while allowing for some capital growth. Reinvesting distributions can accelerate this growth as well. As with other mutual funds, one of the greatest advantages of equity ...
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For example: If an investor places $10,000 in a mutual fund with a front-end load of 2%, then the total sales charge would be $200. The remaining $9,800 will go toward the purchase of shares in the fund. Also, A shares may impose an asset-based sales charge. Investors do not pay these charges directly.
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Ideally, the earnings from the investment should more than make up for the front-end load. In this example, the front-end loaded fund must return 14.6% in one year to reach $11,000 in value, but the no-load fund must only return 10% to do so. Front-end loads vary widely and may apply to reinvestments of dividends, interest, or capital gains.
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For example, let's assume you invest $1,000 in the XYZ Company Mutual fund, which returns 10% every year and has annual 12b-1 fees of 1%. After 10 years, you would have $23,457. However, if the fund's 12b-1 fees were only 0.10%, you would have $25,679 after 10 years--over $2,000 more. Although it is important to compare 12b-1 fees among funds ...
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A mutual fund is a type of investment that pools funding from many individuals to invest in a wide range of securities, which may include stocks, bonds, and other assets. Mutual funds are a portfolio of investments managed by a portfolio manager that allocates the pooled funding to buy a selection of securities, as outlined in the fund's ...
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The aforementioned Legg Mason fund has lost an average of 2% in the past 10 years, according to Morningstar. And now mutual funds have a new competitor in the exchange-traded fund (ETF). Like index funds, ETFs have low expenses while allowing for more targeted investments. If you're bullish on copper, then you can simply buy a low-cost, copper ...
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Some of the major bond-fund categories are: U.S. Treasury bond funds. Municipal bond funds. Mortgage-backed security funds. Corporate bond funds (within this category are several subcategories based on target maturities, credit rating, industry, etc.) International bond funds. Mixed (where the fund manager invests in a variety of different bond ...
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Though mutual funds offer investors instant diversification, professional management, a great amount of ease and a modest entry point, there are some drawbacks. Disadvantage #1: Fees. The first is fees. Over time, management and other fees will have a significant impact on the value of your investment. These fees can add up to 7.5% or more in ...
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Exchange-traded funds (ETFs) are securities that closely resemble index funds, but can be bought and sold during the day just like common stocks. These investment vehicles allow investors a convenient way to purchase a broad basket of securities in a single transaction. Essentially, ETFs offer the convenience of a stock along with the ...
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Mutual funds trace their history to the Massachusetts Investors Trust, which was founded in 1924. As of May 2021, there were about 8,000 mutual funds with more than $20 trillion in assets. 'Passively' managed funds track a market index ; 'actively' managed funds follow the guidelines laid out in the fund 's prospectus , which spells out what the fund can and cannot invest in.
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