The definitions and uses of a mutual fund

Municipal bond funds with duration of 4. The value of the mutual fund company depends on the performance of the securities it decides to buy.

On an average, you would have paid around Rs 21 per unit. The idea is to get competitive performance while still maintaining a healthy conscience.

Investment Glossary

Share classes[ edit ] A single mutual fund may give investors a choice of different combinations of front-end loads, back-end loads and distribution and services fee, by offering several different types of shares, known as share classes.

This measure looks at the appreciation or depreciation that an asset — usually a stock or a mutual fund — achieves over the given period of time. Sector funds are targeted strategy funds aimed at specific sectors of the economy such as financial, technology, health, and so on. For instance, a fund manager may focus on value investinggrowth investingdeveloped markets, emerging markets, income or macroeconomic investing, among many other styles.

It is the measure of the volatility of a security or a portfolio as compared to the market as a whole. These funds seek capital appreciation by investing in small- and mid-sized international stocks that are value-oriented. The Sharpe ratio, also known as Reward to Risk Ratio, measures the risk-adjusted performance.

Close Ended funds These funds begin with a fixed corpus and operate for a fixed duration. The front-end load often declines as the amount invested increases, through breakpoints. There are, however, many different types of equity funds because there are many different types of equities.

Since expense ratios are directly reflected in the performance of the funds, actively managed funds and their often higher expense ratios are automatically at a disadvantage to index funds. At the end of the year, the fund distributes these capital gains, minus any capital losses, to investors.

Mutual Fund

This category includes general- and government-bond funds, and excludes any international, convertible, multisector, and high-yield bond funds. They maintain an investment portfolio that replicates the composition of the chosen index, thus following a passive style of investing.

Index Fund

The Treynor ratio, also known as the Reward to Volatility ratio, measures returns earned in excess of that whichcould have been earned on a risk-less investment per each unit of market risk. This can mean focusing on a broader region say Latin America or an individual country for example, only Brazil.

Mutual Funds Concept

Definition of mutual fund: An open-ended fund operated by an investment company which raises money from shareholders and invests in a group of assets.

A mutual fund is a professionally managed investment fund that pools money from many investors to purchase investors may be retail or institutional in nature. Mutual funds have advantages and disadvantages compared to direct investing in individual securities.

Fee Level This is a proprietary Morningstar data point. Morningstar evaluates a mutual fund share class's expense ratio relative to other funds that invest in a similar.

Net Asset Value

A mutual fund, collective investment fund or other pooled investment that invests primarily in other mutual funds, collective investment funds or pooled investments rather than investing directly in individual securities (such as stocks, bonds, or money market securities).

A twist on the mutual fund is the exchange traded fund, or ETF. These ever more popular investment vehicles pool investments and employ strategies consistent with mutual funds, but they are.

Mutual Funds

Mutual funds are often the first steps to investing for a new investor. Learn what is a mutual fund and how you can use them in your investment process.

The definitions and uses of a mutual fund
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