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Top Mutual Fund Questions for 2008

May 4, 2008
There are many frequent questions that are common about mutual funds. This is probably because mutual funds are so popular these days that many people are already investing in funds or are at least thinking about it. Below are some questions and answers:

Top Mutual Fund Questions Of 2008 - What Is The History Of Mutual Funds?

The Wellington Fund, made up of both stocks and bonds, was started in 1928. However, the Wellington Fund was preceded by investment trusts (which is what mutual funds are technically) all the way back to the early 1800s in the Netherlands. Other funds were started in the United States in the later 1800s.

Top Mutual Fund Questions Of 2008 - What Is An IRA?

Back in 1975, in the United States the IRS code was changed to allow people to contribute up to $2000 per year to an IRA (Individual Retirement Account). IRAs became very popular and many IRA's are invested in mutual funds.

What Does No Load Mutual Fund Mean?

A "load" is a sales fee charged when you buy or sell a mutual fund - the fee is charged by the mutual fund company. A no load fund is one that does not carry such a sales fee.

Top Mutual Fund Questions Of 2008 - What Is A Mutual Fund?

A mutual fund is a group of stocks or bonds that are bought together - individual investors buy shares in the fund instead of the individual securities. You become a shareholder of the mutual fund instead of the individual stocks when you buy shares of a mutual fund.

Index Funds - What Are They?

This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor's 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks. Most investors are probably best off in the long run buying an Index Fund.

What Is Net Asset Value?

Net Asset Value (NAV) is the value of a share in a mutual fund and is calculated by dividing the total value of the fund, less the fund's liabilities, by the number of shares currently issued and outstanding. For most of the funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day.

What Is A Public Offering Price?

Closed-end funds may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by different classes. A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission.
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