Mutual Funds

Mutual funds are a very popular investment for retail investors. They package the investment management skills of professional money managers in an economical manner for smaller amounts. Their current popularity has increased to the point where they are starting to replace traditional savings instruments like bank and trust deposits and even direct investment in stocks and bonds.

A mutual fund is a pool of money that is managed by a professional money manager. Individual investors buy units of the fund which gives them a "pro rata" share of the value of the investments of the fund. The unit value of the fund is struck by adding up the values of all the investments at their market prices, subtracting amounts owed by the fund and dividing by the number of units held.

The most popular type of mutual fund is an "open-ended" unit trust. This means that the fund sponsor has agreed to buy and sell units at the unit value established at certain times. Valuation used to be monthly or weekly, but now is almost universally done by major funds on a daily basis.

A mutual fund is legally governed by its "trust indenture". This states how the fund will work. It establishes the role of the fund manager, who provides the investment management for the fund; the trustee and custodian, which holds the actual assets of the fund; and many other things such as investment policy for the fund, who values the fund and how this is done, and how the fund will make distributions of income.

To learn more, click on the "Bar of Knowlege".

What is a Mutual Fund?

Types of Mutual Funds

Mutual Fund Investment Strategies

Mutual Fund Fees

Asset Allocation and Mutual Funds, by Mark Newsome & Tom Box

Portfolio Advisors - Principals vs. Hired Guns, by Mark Newsome & Tom Box

The Significance of Track Records, by Mark Newsome & Tom Box

Manufacturing Track Records, by Mark Newsome & Tom Box

Royalty and Income Trusts

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