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Mutual Funds
Goal
• Diversification
• Professional Money Management
• Easy
• Time and Energy Saver
• Higher returns than if you ‘do it yourself’
Structure
• Money from individuals is pooled by a fund management company (Vanguard / Fidelity).
• Fund Manager (Advisor) buys and sells stocks or bonds with the pooled funds.
• Individual investors benefit from diversification with little investment.
Key Metrics
• Net Asset Value (NAV)– A ‘per share’ measurement of the total value of
the assets held by the mutual fund
• Performance– Percentage gain in fund value over a specified
time period (annually, quarterly, etc.)
Fees
• Load (Sales fees)
• 12(b)-1 fees (marketing fees)
• Management fees
• www.morningstar.com
Taxes
• Till death do us part….
Mutual Funds Categories
• Growth• Aggressive Growth• Value• Income• Equity-Income• Bond• Asset Allocation
• Balanced• Growth and Income• Sector• Index• Conscience (Socially
Responsible
If You Can’t Beat ‘em Join ‘em
• Index funds historically out-perform actively-managed mutual funds
• Lower fees
• Lower taxes
• More sleep at night…
Tools
• Morningstar (the king)
• Matching funds to your objectives
• Portfolios constructed entirely with funds
• Diversification by buying funds that balance each other
Let’s Take a Closer Look
• www.fidelity.com
• www.janus.com