Frequently Asked Mutual Fund Questions

Mutual funds are so popular nowadays that there are actually more mutual funds available than there are stocks of individual companies. Below we present some of the most popular questions about mutual funds along with some short answers to the questions.

Top Mutual Fund Questions Of 2008 - What Is The History Of Mutual Funds?

Mutual funds actually go all the way back to the Netherlands in the early 1800s. Mutual funds were then called an investment trust (which most still are today). Mutual funds came to America in 1889 with the New York Stock Trust. Many mutual funds in America were started in Boston, which was a financial center of some renown back in the 1800s.

How Do IRAs Relate to Mutual Funds?

Back in 1975, in the United States the IRS code was changed to allow people to contribute up to $2000 per year to an IRA (Individual Retirement Account). IRAs became very popular and many IRA's are invested in mutual funds.

What Does No Load Mutual Fund Mean?

This type of fund is offered by an open-ended investment company that imposes no sales charge (load) on its shareholders. Investors buy shares in no-load funds directly from the fund companies, rather than through a broker, as is done in load funds.

What Exactly is a Mutual Fund?

Mutual Funds are pooled investment trusts - the fund buys shares of stocks and you as the individual investor buy shares of the fund instead of the individual stocks.

What Is An Index Fund?

This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor's 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks.

What Is Net Asset Value?

For most of the funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day.

Public Offering Price - What is It?

A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission. Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by different classes.

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