More About Mutual Funds

Since mutual funds are financial investments called "securities" which can be bought and sold, they are regulated by governments.

In Canada, this is a responsibility of the Provincial governments. In Ontario for example, mutual funds and the people who sell them are regulated by the Ontario Securities Commission (OSC). They must have a "prospectus"( a legal description of the fund) which ensures disclosure of all relevant information concerning a mutual fund. Mutual fund companies and sales agents are also regulated to make sure that they provide proper information to potential investors.

Mutual funds are established by fund sponsors, who are usually the fund management company. They go through the legal work of having a fund approved and make the initial investments in the fund. In return, the fund structure usually allows for the fund company to recover their costs and administration expenses and receive a "management fee" for providing the investment management for the fund. These expenses are taken out of the fund on an ongoing basis. The level of these fees compared to the total assets of a fund is referred to as the "Management Expense Ratio" or "M.E.R." and usually ranges between 0.5% and 3.5% of fund assets. Any significant changes to the fund requires approval by a vote of the unitholders, as set out in the trust indenture.

There are many types of mutual funds, such as equity, bond, balanced and money-market, which invest in domestic or foreign marketable securities. There are also mutual funds that invest in real estate, mortgages, and other less liquid types of investments. Recently, labour-sponsored funds have taken advantage of Canadian Income Tax legislation which allows investors to shelter invested monies from income tax in exchange for investment in smaller, start-up companies.

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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