Mutual Fund Analysis



Mutual Fund Analysis

Mutual Funds

A mutual fund is a savings instrument that brings together a large number of people who want to invest their money. Mutual funds are one of the best options for obtaining higher yields of the money, one want to invest, since interest rates on deposits are very low. However, investment funds include a difference risk of deposits. There are mutual funds whose investments are classified according to the investment risk. One can go to an investment company and consult a specialist about the investment risk of a fund that is "moderate", "conservative" and "aggressive". The investor can choose a particular a particular fund according to the risk appetite of the investor.

A mutual fund is an equity contributions made by different persons, called participants in the fund, managed by a management company responsible for its management and administration, and by a Depositary that custody the securities and cash and acts as security and surveillance before investment. By investing in a fund one will get a number of shares, which are priced daily on net asset value, obtained by the division between equity value and number of units outstanding. The investor can gain from dividends and capital gains, very similar to the way stocks work.

The investment funds help to organize a group of investors looking for a common purpose. Conceptually, an investment fund is a collective investment company in which all participants receive higher returns for the amount of their capital than they would individually, in other words what you do is collect a contribution of equity between several people.

As per the yields, mutual funds are classified into two categories:

a) Income Funds or cast- The income in the Income Funds are distributed on a regular basis in the form of regular income. The income is distributed through the help of dividends.

b) Funds Cap or Growth. In Funds Cap, the management company collects rents and income is reinvested in the Fund's assets.

c) Bond funds: are funds that invest exclusively or in greater proportion in fixed income instruments, offer lower returns, but are less risky.

d) Mixed-income funds: These are funds that invest approximately 50% in fixed income instruments and 50% in equities. It offers higher returns than fixed income funds, but a lower return than equity; also at higher risk than bond funds, but less risk than equities.

e) Equity funds: These are funds that invest exclusively or in greater proportion in equity instruments, offering the highest return, but due to stock market volatility are the most risky.

Some of the advantages of mutual funds is that it requires a high individual capital (the plurality of investors that the investment is made accessible) and there is also a very small chance of losing the entire investment even if you can actually lose money by investing therein.

Companies offering Mutual Funds provide professional expertise to investors, who do not have time and knowledge to understand the dynamics of the market and take wise investment ...