|
General Mutual
Fund Overview
Mutual Funds are the most common
type of investment in North America. Fund investors, in the 90s,
introduced a variety
of specialty funds, which caused an explosion in the
number of Mutual Funds available to the public.
Nowadays there are many funds specializing in:
- Specific industries
- Specific commodities
- Specific marketplaces
- real estate investment or mortgages
- even options and futures on specific
stock exchanges
You can find Funds for every
objective, taste and interest. The number of Funds is growing
daily.
A mutual Fund has a simple capital
structure, it has a nominal number of deferred
shares (common shares), which are held by the sponsor of the
company; and a number of shares, which are offered for sale to
the public.
Mutual
Funds can be sold to the public by:
- Investment dealers and brokers
- Banks
- Trust companies
There
are usually five ways to buy Mutual Funds:
- Cash investment - you
can buy a number of mutual Fund shares. Most Funds offer a
discount on the loading fee if the investment is usually more
25000$
- Reinvestment of
dividend - the shareholders can reinvest their dividend
- Non-contractual saving
plan - an investor can open a small account and then add
monthly or quarterly amounts.
- Contractual plan -
specified amount each month over a specific period.
- Withdrawal plan - one
time investing in a Fund and then withdraws dividends and some
principal amount at regular intervals.
An investment fund does not
always guarantee capital growth. The value of shares (units) is
usually calculated by taking the total market value of all
investments divided by number of units (shares). So, if a mutual
Fund succeeds on the market their shareholders are wealthy
otherwise they can loose not only dividends but an invested
capital as well. |
