Professional Documents
Culture Documents
Mutual Fund
Mutual Fund
Mutual Fund
Market size
At the end of 2020, open-end mutual
fund assets worldwide were $63.1
trillion.[5] The countries with the largest
mutual fund industries are:
History
Early history
y y
Features
Like other types of investment funds,
mutual funds have advantages and
disadvantages compared to
alternative structures or investing
directly in individual securities.
According to Robert Pozen and
Theresa Hamacher, these are:
Advantages
Increased opportunity for
diversification: A fund diversifies by
holding many securities. This
diversification decreases risk.
Daily liquidity: In the United States,
mutual fund shares can be
redeemed for their net asset value
within seven days, but in practice the
redemption is often much quicker.
This liquidity can create asset–
liability mismatch which poses
challenges, which in part motivated
an SEC liquidity management rule in
2016.[15]
Professional investment
management: Open-and closed-end
funds hire portfolio managers to
supervise the fund's investments.
Ability to participate in investments
that may be available only to larger
investors. For example, individual
investors often find it difficult to
invest directly in foreign markets.
Service and convenience: Funds
often provide services such as check
writing.
Government oversight: Mutual funds
are regulated by a governmental
body
Transparency and ease of
comparison: All mutual funds are
required to report the same
information to investors, which
makes them easier to compare to
each other.[13]
Disadvantages
Fees
Less control over the timing of
recognition of gains
Less predictable income
No opportunity to customize[13]
United States
In the United States, the principal laws
governing mutual funds are:
European Union
Canada
Hong Kong
Taiwan
India
Fund structures
There are three primary structures of
mutual funds: open-end funds, unit
investment trusts, and closed-end
funds. Exchange-traded funds (ETFs)
are open-end funds or unit investment
trusts that trade on an exchange.
Open-end funds
Open-end mutual funds must be willing
to buy back ("redeem") their shares
from their investors at the net asset
value (NAV) computed that day based
upon the prices of the securities owned
by the fund. In the United States, open-
end funds must be willing to buy back
shares at the end of every business
day. In other jurisdictions, open-end
funds may only be required to buy
back shares at longer intervals. For
example, UCITS funds in Europe are
only required to accept redemptions
twice each month (though most UCITS
accept redemptions daily).
Most open-end funds also sell shares
to the public every business day; these
shares are priced at NAV.
Classification of funds by
types of underlying
investments
Mutual funds may be classified by
their principal investments, as
described in the prospectus and
investment objective. The four main
categories of funds are money market
funds, bond or fixed-income funds,
stock or equity funds, and hybrid
funds. Within these categories, funds
may be sub-classified by investment
objective, investment approach, or
specific focus.
Bond funds
Hybrid funds
Other funds
Expenses
Investors in a mutual fund pay the
fund's expenses. Some of these
expenses reduce the value of an
investor's account; others are paid by
the fund and reduce net asset value.
Management fee
Distribution charges
Expense ratio
No-load fund
P(1+T)n = ERV
Where:
P = a hypothetical initial payment of
$1,000
n = number of years
Portfolio turnover
Portfolio turnover is a measure of the
volume of a fund's securities trading. It
is expressed as a percentage of the
average market value of the portfolio's
long-term securities. Turnover is the
lesser of a fund's purchases or sales
during a given year divided by average
long-term securities market value for
the same period. If the period is less
than a year, turnover is generally
annualized.
See also
Active management
Fund derivative
Index fund
Lipper average
List of mutual-fund families in
Canada
List of mutual-fund families in the
United States
List of US mutual funds by assets
under management
Money market fund
Collective trust fund
Mutual funds in India
Mutual-fund scandal (2003)
Rights of accumulation
References
1. "Mutual Funds" (https://www.investor.g
ov/introduction-investing/investing-ba
sics/investment-products/mutual-fun
ds-and-exchange-traded-1) . U.S.
Securities and Exchange Commission.
2. "Mutual Funds and Exchange-Traded
Funds (ETFs) – A Guide for Investors"
(https://www.sec.gov/reportspubs/inv
estor-publications/investorpubsinwsm
fhtm.html) . U.S. Securities and
Exchange Commission.
3. Deepthi Fernando; Leora Klapper;
Víctor Sulla; Dimitri Vittas (2013-05-31).
World Bank Policy Research Working
Paper 3055 (http://documents1.worldb
ank.org/curated/en/3423414687817514
57/108508322_20041117143517/addition
al/multi0page.pdf) (PDF). World Bank.
4. "Mutual Funds vs. Hedge Funds: What's
the Difference?" (https://www.investop
edia.com/ask/answers/173.asp) .
Investopedia. Retrieved 2023-01-05.
5. 2021 Investment Company Fact Book
(https://www.ici.org/system/files/2021
-05/2021_factbook.pdf) (PDF).
Investment Company Institute. 2021.
6. Goetzmann, William N.; Rouwenhorst, K.
Geert (2005). The Origins of Value: The
Financial Innovations that Created
Modern Capital Markets. (Oxford
University Press, ISBN 978-
0195175714))
7. Rouwenhorst, K. Geert (December 12,
2004). "The Origins of Mutual Funds" (h
ttps://papers.ssrn.com/sol3/papers.cf
m?abstract_id=636146) . Yale School
of Management. Social Science
Research Network. SSRN 636146 (http
s://papers.ssrn.com/sol3/papers.cfm?
abstract_id=636146) .
8. Fink, Matthew P. (January 13, 2011). The
Rise of Mutual Funds: An Insider's View
(https://books.google.com/books?id=V
tpQovTBAfIC) . Oxford University
Press. ISBN 978-0-19-975350-5.
9. Peter Lynch and John Rothschild,
Beating the Street Simon & Schuster;
Revised edition (May 25, 1994)
0671891634
10. Robin Wigglesworth (2021). Trillions:
How a Band of Wall Street Renegades
Invented the Index Fund and Changed
Finance Forever. Portfolio Books, ISBN
0593087682
11. Rex Sinquefield's Crusade Against
Income Taxes. (https://web.archive.or
g/web/20120330222645/http://www.bu
sinessweek.com/articles/2012-03-29/r
ex-sinquefields-crusade-against-inco
me-taxes) Business Week. March 12,
2012.
12. Riley, Naomi Schaefer (October 26,
2012). "The Weekend Interview with
Rex Sinquefield: Meet One of the
Super-PAC Men" (https://www.wsj.com/
articles/SB100014240529702038974045
78078551936968168) . WSJ. Retrieved
December 30, 2015.
13. Pozen, Robert; Hamacher, Theresa
(2015). The Fund Industry: How Your
Money is Managed. Hoboken, New
Jersey: Wiley. pp. 8–14.
ISBN 9781118929940.
14. Gomolka, Johannes; Jasny, Ralf
(January 10, 2007). "Die zwei Gesichter
der deutschen Fondsbranche. Cut-Off-
Zeit und Zeitzonenarbitrage" (https://
beckassets.blob.core.windows.net/pro
duct/toc/122544/9783898218337_toc_0
01.pdf) [The two faces of the German
fund industry. Cut-off time and time
zone arbitrage] (PDF) (in German).
Hannover: Ibidem Press.
15. "Investment Company Liquidity Risk
Management Programs RIN 3235-
AL61" (https://www.regulations.gov/doc
ument/SEC-2016-2027-0001) .
Regulations.gov.
16. "26 U.S. Code §& 851 – Definition of
regulated investment company" (http
s://www.law.cornell.edu/uscode/text/2
6/851) . Legal Information Institute.
Cornell Law School.
17. "The Laws That Govern the Securities
Industry" (https://www.investor.gov/int
roduction-investing/investing-basics/r
ole-sec/laws-govern-securities-indust
ry) . U.S. Securities and Exchange
Commission.
18. "Canadian Securities Administrator:
Overview" (https://www.securities-ad
ministrators.ca/about/) .
19. "Products" (https://www.sfc.hk/en/Reg
ulatory-functions/Products) .
Securities and Futures Commission.
20. "MPFA" (https://www.mpfa.org.hk/en) .
21. "Financial Supervisory Commission" (ht
tps://www.fsc.gov.tw/en/index.jsp) .
Financial Supervisory Commission. 19
October 2021.
22. "Mutual Funds - India" (https://www.mu
tualfundindia.com/Home/MfBasics) .
23. Viswanathan, Ganapathy. " 'Mutual
Funds Sahi Hai' – The anatomy of a
campaign that fortified a category -
Adgully.com" (https://www.adgully.co
m/mutual-funds-sahi-hai--the-anatom
y-of-a-campaign-that-fortified-a-cate
gory-98827.html) . www.adgully.com.
Retrieved 2022-03-02.
24. Ammann, Kind & Wilde (2010)
25. Ammann, Kind & Wilde (2010), p. 2601-
2603
26. "Final Rule: Registration Form Used by
Open-End Management Investment
Companies: Sample Form and
instructions" (https://www.sec.gov/rule
s/final/33-7512f.htm#E12E2) . U.S.
Securities and Exchange Commission.
March 23, 1998.
Further reading
Pozen, Robert; Hamacher, Theresa
(2015). The Fund Industry: How Your
Money is Managed (https://books.go
ogle.com/books?id=7yYhBgAAQBAj)
(2nd ed.). Hoboken, New Jersey:
Wiley. ISBN 978-1118929940.
Lemke, Thomas P.; Lins, Gerald T.;
Smith, A. Thomas (March 6, 1997).
Regulation of Investment Companies
(https://books.google.com/books?id=
Ac5hewAACAAJ) . LexisNexis.
ISBN 978-0-8205-2005-6.
Lemke, Thomas P.; Lins, Gerald T.;
McGuire, W. John (December 18,
2020). Regulation of Exchange-
Traded Funds (https://books.google.c
om/books?id=jOvkDwAAQBAJ) .
LexisNexis. ISBN 978-0-7698-9131-6.
Ammann, Manuel; Kind, Axel; Wilde,
Christian (2010). "What drives the
performance of convertible-bond
funds?" (https://www.efmaefm.org/0
efmameetings/EFMA%20ANNUAL%2
0MEETINGS/2007-Austria/papers/05
26.pdf) (PDF). Journal of Banking and
Finance. 34 (11): 2600–2613.
doi:10.1016/j.jbankfin.2010.04.016 (htt
ps://doi.org/10.1016%2Fj.jbankfin.201
0.04.016) .
External links
Mutual Funds and ETFs: A Guide for
Investors (https://www.sec.gov/inves
tor/pubs/sec-guide-to-mutual-fund
s.pdf) , U.S. Securities and Exchange
Commission
Retrieved from
"https://en.wikipedia.org/w/index.php?
title=Mutual_fund&oldid=1158981725"
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