Mutual Funds
Mutual Funds
Meredith Markham
Managerial Finance
Marc Lafond, MBA
May 5, 2013
Mutual Funds There are many different people that can be considered investors. With so many different types of investors, it is only natural that there be a variety of types of mutual funds to invest in. “At last count there were more than 10,000 mutual funds in North America” meaning there “are more mutual funds than stocks” (“Mutual Funds,” n.d.). For this paper, we will focus on five types of mutual funds: Equity, Index, Global/International, Sector and Balanced.
Each of these mutual funds can be “Load” or “No-Load” and have a variety of expenses that can be passed on to the investor. “Load denotes either a fund’s maximum initial or deferred sales charge” (“Load,” n.d.). No Load “refers to a mutual fund that typically does not charge a fee for buying or selling its shares” (“No Load,” n.d.). Some of the expenses that are incurred by the investor are redemption fees, small balance fees, distribution fees and service fees to name a few. These fees are expressed as an expense ratio. Both the expenses and whether or not a fund is a no load or a load fund are very important when choosing a fund to invest in. Equity Funds are “a mutual fund that invests principally in stocks” and “can be actively or passively (index fund) managed” (“Equity,” n.d.). Also known as a "stock fund,” Equity Funds are the largest category of mutual funds (“Mutual Funds,” n.d.). Equity Funds have a general objective of “long-term capital growth with some income” (“Mutual Funds,” n.d.). An example of an Equity Fund is the Fidelity Select Utilities (FSUTX). This is a fund that invests in utilities. The top five companies in which this fund has holdings are as follows: Duke Energy Corp., American Electric Power Company Inc., PG & E Corp., Sempra Energy, and Edison International (“FSUTX,” n.d.). FSUTX is a no load fund with an expense ratio of 0.83%. It has had a positive 10
Meredith Markham
Managerial Finance
Marc Lafond, MBA
May 5, 2013
Mutual Funds There are many different people that can be considered investors. With so many different types of investors, it is only natural that there be a variety of types of mutual funds to invest in. “At last count there were more than 10,000 mutual funds in North America” meaning there “are more mutual funds than stocks” (“Mutual Funds,” n.d.). For this paper, we will focus on five types of mutual funds: Equity, Index, Global/International, Sector and Balanced.
Each of these mutual funds can be “Load” or “No-Load” and have a variety of expenses that can be passed on to the investor. “Load denotes either a fund’s maximum initial or deferred sales charge” (“Load,” n.d.). No Load “refers to a mutual fund that typically does not charge a fee for buying or selling its shares” (“No Load,” n.d.). Some of the expenses that are incurred by the investor are redemption fees, small balance fees, distribution fees and service fees to name a few. These fees are expressed as an expense ratio. Both the expenses and whether or not a fund is a no load or a load fund are very important when choosing a fund to invest in. Equity Funds are “a mutual fund that invests principally in stocks” and “can be actively or passively (index fund) managed” (“Equity,” n.d.). Also known as a "stock fund,” Equity Funds are the largest category of mutual funds (“Mutual Funds,” n.d.). Equity Funds have a general objective of “long-term capital growth with some income” (“Mutual Funds,” n.d.). An example of an Equity Fund is the Fidelity Select Utilities (FSUTX). This is a fund that invests in utilities. The top five companies in which this fund has holdings are as follows: Duke Energy Corp., American Electric Power Company Inc., PG & E Corp., Sempra Energy, and Edison International (“FSUTX,” n.d.). FSUTX is a no load fund with an expense ratio of 0.83%. It has had a positive 10
References: Balanced Fund Definition | Investopedia. (n.d.). Retrieved May 5, 2013, from http://www.investopedia.com/terms/b/balancedfund.asp Equity Fund Definition | Investopedia FSUTX Summary - Select Utilities Portfolio | Fidelity Investments. (2013, May 4). Retrieved May 4, 2013, from https://fundresearch.fidelity.com/mutual-funds/summary/316390509 Global Fund Definition | Investopedia IBALX - Summary of TRANSAMERICAMULTI MANAGED BALANC - Zacks.com. (n.d.). Retrieved May 4, 2013, from http://www.zacks.com/funds/mutual-fund/quote/IBALX Index Fund Definition | Investopedia Load. (n.d.). Retrieved May 5, 2013, from http://www.morningstar.com/InvGlossary/load_definition_what_is.aspx Mutual Funds: Different Types Of Funds | Investopedia No Load. (n.d.). Retrieved May 5, 2013, from http://www.morningstar.com/InvGlossary/no_load_definition_what_is.aspx PSPFX U.S Sector Fund Definition | Investopedia. (n.d.). Retrieved May 5, 2013, from http://www.investopedia.com/terms/s/sectorfund.asp USAGX - Summary of USAA PRECIOUS METALS AND MINERAL - Zacks.com Vanguard - Vanguard 500 Index Fund Investor Shares. (n.d.). Retrieved May 4, 2013, from https://personal.vanguard.com/us/FundsSnapshot?FundId=0040&FundIntExt=INT