mutual fundss in india

8/10/2019 Mutual Fundss in India

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An Introduction to

Mutual Funds

PowerPoint Notes


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What are Mutual Funds?

Mutual funds are a type of investmentthat takes money from many investors

and uses it to make investments basedon a stated investment objective.

Each shareholder in the mutual fund

participates proportionally (based uponthe number of shares owned) in the gainor loss of the fund.


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Why do People Invest in

Mutual Funds?

Mutual funds offer investors an affordable way todiversify their investment portfolios.

Mutual funds allow investors the opportunity to have a

financial stake in many different types of investments. These investments include: stocks, bonds, money

markets, real estate, commodities, etc

Individually, an investor may be able to own stock in afew companies, a few bonds, and have money in amoney market account. Participation in a mutual fund,however, allows the investor to have much greaterexposure to each of these asset classes.


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Continued

Most mutual funds are professionally managedby an investment expert known as a portfoliomanager.

This individual makes all of the buying andselling decisions for the fund.

There are thousands of different mutual fundsin the United States.

This provides investors with many options tohelp them achieve their investment objectives.


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Basic Mutual Fund

Categories

Mutual Funds can be divided into fourbasic categories based upon the funds

investment objective. These categories are:

1. Money Market Mutual Funds

2. Stock Mutual Funds3. Index Funds

4. Bond Mutual Funds

5. Balanced Mutual Funds


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Money Market Mutual

Funds

This is the most conservative type of mutual fund.

The goal is to maintain the $1 value of its shares whileproviding income.

Invests in high-quality, short-term securities such ascertificates of deposit, U.S. Treasury Bills, and U.S.Treasury Notes.

MMMFs are an appropriate place for savings.

These funds have typically offered higher interest ratesthan bank savings accounts.

Money market mutual funds are not insured by theFDIC.


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Stock Mutual Funds

Type of fund that invests in stocks. These funds are also known as equity funds. There are many different types of stock mutual

funds. Some of the most common include:Large-cap funds, mid-cap funds, small-cap funds,

income funds, growth funds, value funds, blend

funds, international funds, and sector funds.


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Index Funds

These are mutual funds whose holdings aim to trackthe performance of a specific stock market index.

The most common index fund tracks the S&P 500.

These index funds invest in the exact stocks (and inthe same percentages) as those found in the S&P 500.

Index funds also track bonds, real estate, and othertypes of assets.

These funds are lower cost than other types of funds.


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Good News

It is time for us to begin watching aNightly Business Report Video on Mutual

Funds! With a question sheet of course!

Dont worry we will continue the

PowerPoint during our next class!


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Bond Mutual Funds

Type of mutual fund that invests inbonds.

There are different types of bond mutualfunds.

Typically, bond mutual funds have the

objective of providing stable income withminimal risk.


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Types of Bond Mutual

Funds

Short, Intermediate, and Long-Term U.S. Bond

Funds Short, Intermediate, and Long-Term Corporate

Bond Funds

Municipal Bond Funds

High-Yield (junk) Bond Funds

We will talk more about bonds and bond fundslater in this unit of study.


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Balanced Mutual Funds

These are also known as hybrid funds.

These mutual funds invest in stocks,

bonds, and money markets. These are very diversified mutual funds.

The stock portion of the fund provides the

potential for capital appreciation, whilethe bond and money market portionprovide income.


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The Mutual Fund

Prospectus

This is a legal document which describesthe investment objective of the fund, the

manner in which the fund is administeredand operated, the fees and otherpertinent information.

The prospectus should be readthoroughly before making an investmentdecision.


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Load v. No Load Mutual

Funds

A mutual fund that charges a commissionto cover its administrative costs is called

a load fund. A front-end load charges the load when

the shares are purchased, while a back-

end load charges the load when theshares are sold.

A no-load mutual fund doesnt charge a

purchase or sales commission.


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Major Mutual Fund

Companies

Vanguard, Fidelity, and T. Rowe Priceare three of the worlds major mutual

fund companies. http://vanguard.com

http://fidelity.com

http://troweprice.com
http://vanguard.com/http://fidelity.com/http://troweprice.com/http://troweprice.com/http://fidelity.com/http://vanguard.com/

mutual fundss in india

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