MK Prabhagharan-Mutual Funds, Investing, Financial Advisors Karur...

MK Prabhagharan-Mutual Funds, Investing, Financial Advisors Karur...

Mutual fund is a company that pools money from many investors and invests the money in stocks, debentures/bonds, equities, short-term money market tools or other securities. The income produced through these investments plus the appreciation of capital earned by the scheme are shared by its entity holders depending on the units possessed by them. Thus, mutual funds can be well thought of as financial middleman in the investment trade who collect funds from the people and invest on behalf of the investors.

 The Investment objectives outlined by a  Mutual Fund Advisor is prospectus are binding on the Mutual Fund scheme. The investment goals state the class of securities in which a Mutual Fund can invest. Generally the portfolio of Mutual Funds comprises of various asset classes such as bonds, debentures, equity, and government securities, equipment. Stocks and bonds are the primary assets of the mutual fund while investing in equipment etc. take a back seat.


Bond funds

As the name suggests, bond funds are mutual funds investing in various types of bonds. Bond funds may be appropriate for investors who:

1 Value relatively steady income over growth
2 Seek yields that are potentially higher than money market rates
3 Want to diversify investments
4 Can accept modest fluctuations in the share price

Bond funds aren't the same as bonds. There's no fixed yield nor contractual obligation to repay investors their principal at a future date, as is the case with bonds. Bond fund managers continually trade their positions, so the risk-return characteristics of a bond fund investment is always changing, just as with other mutual fund investments.

Balanced funds

These funds, also known as hybrid funds, are a combination of stock and bond funds. Balanced funds seek high total return by investing in a mix of equities, fixed-income securities and money market instruments. Unlike flexible portfolio funds, these funds are required to strictly maintain a precise weighting in asset classes.

Money market funds

Money market funds typically invest in short-term government and company loans, which, while lower-yielding, are generally less risky than many other types of funds. Money market funds can be appropriate for investors who:

1 Need access to their money in the near future
2 Are looking for a current short-term rate of interest
3 Are very conservative in their investment approach

An investment in a money market fund is not insured or guaranteed by government agency. Therefore, while the fund seeks to preserve the value of your investment at $1 per share, it is possible to lose money while investing in the fund.

Classification of class shares

When you invest in a mutual fund, you purchase a share of that fund. There are different share classes in which you can invest, the most common of which are class A, B and C shares. Share classes vary mainly in the type of sales charge and expenses you incur. The best share class for you depends on a number of factors, including the amount you plan to invest and how long you plan to hold the shares.

Share types

 1 Class A shares have a front-end sales charge you pay at the time of purchase and is deducted from your investment amount.

 2 Class B shares typically do not have an up-front sales charge. Instead, a class B share has a contingent deferred sales charge that declines each year until it eventually expires. Once their CDSC expires, Class B shares convert to Class A shares.

 3 Class C shares do not have an initial sales charge. Rather, they also have a contingent deferred sales charge-typically 1% if shares are sold within the first year. They do not convert to Class A shares and have an ongoing, higher management fee.

Operating expenses

All mutual funds have operating expenses that may include management fees, distribution fees or 12b-1 fees and shareholder mailings, among other expenses. You do not pay for these directly. Instead, they are deducted from the fund's net assets-or the overall return of the fund. For more information on a fund's fees and expenses, refer to the fund prospectus.

A fund's total expense ratio is the combination of the different operating expenses, such as advisory fees, distribution fees and ongoing fees. The fund's expense ratio is a means to compare its cost to that of other funds and to learn about the fund's fees and expenses.

Shareholder fees include any commissions paid to brokers when shares are bought or sold. These commissions are often described as "front-end loads" sales charges when you buy or "back-end loads" . No-load funds, as the name implies, do not have front-end or back-end sales charges, but generally do have operating expenses and shareholder fees.

Taxes

Each year, Mutual Fund Advisor outside of an employer tax-qualified plan must distribute substantially all of their income and capital gains to shareholders.

Determine your financial objectives

MK Prabhagharan is right for you depends on your financial goals. It offer longer-term investment with greater historical risk, but potentially higher returns? Before investing in a fund, carefully review the fund's investment style, performance history and expense ratio, and consider your time horizon and level of risk tolerance.For more details http://mkprabhagharan.com/