Home | About Us | Contact Us
Submit Articles | Member Login | Top Authors | Most Popular Articles | Submission Guidelines | Categories | RSS Feeds See As RSS
 
 
   
Forgot Password?    New User?
Poetry
Business
Music
Humor
Arts & Entertainment
Movies
Destinations
Women Issues
Home Improvement
Dating
Real Estate
SEO
Health & Fitness
Investing
Home Based Business
View all Categories


Welcome to iArticleBeach.com - Free Articles for Reprint. Add great content to your web site today!

Articles » Finance » Mutual-Funds >> View Article
Mutual Funds - An Introduction and Brief History By: Sachin A
Each one of us does not have the expertise or the time to build and manage an investment portfolio. There is an excellent alternative available – mutual funds.

A mutual fund is an investment intermediary by which people can pool their money and invest it according to a predetermined objective.

Each investor of the mutual fund gets a share of the pool proportionate to the initial investment that he makes. The capital of the mutual fund is divided into shares or units and investors get a number of units proportionate to their investment.

The investment objective of the mutual fund is always decided beforehand. Mutual funds invest in bonds, stocks, money-market instruments, real estate, commodities or other investments or many times a combination of any of these.

The details regarding the funds’ policies, objectives, charges, services etc are all available in the fund’s prospectus and every investor should go through the prospectus before investing in a mutual fund.

The investment decisions for the pool capital are made by a fund manager (or managers). The fund manager decides what securities are to be bought and in what quantity.

The value of units changes with change in aggregate value of the investments made by the mutual fund.

The value of each share or unit of the mutual fund is called NAV (Net Asset Value).

Different funds have different risk – reward profile. A mutual fund that invests in stocks is a greater risk investment than a mutual fund that invests in government bonds. The value of stocks can go down resulting in a loss for the investor, but money invested in bonds is safe (unless the Government defaults – which is rare.) At the same time the greater risk in stocks also presents an opportunity for higher returns. Stocks can go up to any limit, but returns from government bonds are limited to the interest rate offered by the government.

History of Mutual Funds:

The first “pooling of money” for investments was done in 1774. After the 1772-1773 financial crisis, a Dutch merchant Adriaan van Ketwich invited investors to come together to form an investment trust. The goal of the trust was to lower risks involved in investing by providing diversification to the small investors. The funds invested in various European countries such as Austria, Denmark and Spain. The investments were mainly in bonds and equity formed a small portion. The trust was names Eendragt Maakt Magt, which meant “Unity Creates Strength”.

The fund had many features that attracted investors:

- It had an embedded lottery.
- There was an assured 4% dividend, which was slightly less than the average rates prevalent at that time. Thus the interest income exceeded the required payouts and the difference was converted to a cash reserve.
- The cash reserve was utilized to retire a few shares annually at 10% premium and hence the remaining shares earned a higher interest. Thus the cash reserve kept increasing over time – further accelerating share redemption.
- The trust was to be dissolved at the end of 25 years and the capital was to be divided among the remaining investors.

However a war with England led to many bonds defaulting. Due to the decrease in investment income, share redemption was suspended in 1782 and later the interest payments were lowered too. The fund was no longer attractive for investors and faded away.

After evolving in Europe for a few years, the idea of mutual funds reached the US at the end if nineteenth century. In the year 1893, the first closed-end fund was formed. It was named the “The Boston Personal Property Trust.”

The Alexander Fund in Philadelphia was the first step towards open-end funds. It was established in 1907 and had new issues every six months. Investors were allowed to make redemptions.

The first true open-end fund was the Massachusetts Investors’ Trust of Boston. Formed in the year 1924, it went public in 1928. 1928 also saw the emergence of first balanced fund – The Wellington Fund that invested in both stocks and bonds.

The concept of Index based funds was given by William Fouse and John McQuown of the Wells Fargo Bank in 1971. Based on their concept, John Bogle launched the first retail Index Fund in 1976. It was called the First Index Investment Trust. It is now known as the Vanguard 500 Index Fund. It crossed 100 billion dollars in assets in November 2000 and became the World’s largest fund.

Today mutual funds have come a long way. Nearly one in two households in the US invests in mutual funds. The popularity of mutual funds is also soaring in developing economies like India. They have become the preferred investment route for many investors, who value the unique combination of diversification, low costs and simplicity provided by the funds.



Know more about mutual funds at http://www.completeonlinetrading.com
Total Views : 834    Word Count Appx. : 788 See All articles From Author




http://news.yahoo.com/facebooks-ipo-one-worlds-largest-233225092--finance.html A Facebook logo is displayed on the screen of an iPad, Wednesday, May 16, 2012 in New York. Facebook's initial public offering is one of the most hotly anticipated in years. The company is likely to have an estimated market valuation of $100 billion when its shares begin trading on the Nasdaq stock market on Friday. (AP Photo/James H. Collins)Facebook is about to find out just how much status updates, puppy photos and billions of "likes" are worth on Wall Street.


" target="_blank">Facebook's IPO one of world's largest
2012-05-18T04:07:58Z

http://news.yahoo.com/reports-hp-poised-eliminate-30-000-jobs-194048870--finance.html Reports: HP poised to eliminate up to 30,000 jobs
2012-05-18T01:31:04Z

http://news.yahoo.com/the-next-digital-image-revolution-.html Lytro unveils its digital cameraDespite the explosive innovation around digital picture-taking, the end result has actually changed very little. A photo is still a photo. And a poorly focused photo is still as bad as ever. Ren Ng aims to fix that.


" target="_blank">The next digital image revolution?
2012-05-09T05:57:33Z

http://news.yahoo.com/blogs/technology-blog/19-000-electric-quadrofoil-sports-car-water-020048579.html Continue reading →" target="_blank">$19,000 electric Quadrofoil is a sports car for the water
2012-05-18T02:00:48Z

http://news.yahoo.com/blogs/technology-blog/study-cup-six-coffee-day-may-keep-death-015330912.html Continue reading →" target="_blank">Study: A cup (or six) of coffee a day may keep death at bay
2012-05-18T01:53:30Z

http://news.yahoo.com/viral-vinyl-amazing-guerrilla-marketing-stunts-fool-media-232509783.html Viral Vinyl! Amazing Guerrilla Marketing Stunts Fool Media [VIDEO]
2012-05-17T23:25:09Z

http://news.yahoo.com/facebook-grows-millions-no-thanks-073535378--finance.html FILE - In this Aug. 25, 2009 file photo, Internet pioneer Len Kleinrock poses for a portrait next to an Interface Message Processor, which was used to develop the Internet. Kleinrock, arguably the world's first Internet user, says Facebook is fine for his grandchildren, but it's not for him. (AP Photo/Matt Sayles, File)Don't try to friend MaLi Arwood on Facebook. You won't find her there.


" target="_blank">As Facebook grows, millions say, 'no, thanks'
2012-05-17T17:52:17Z

http://news.yahoo.com/yahoos-boss-revamps-recently-created-division-012319945--finance.html Yahoo's new boss revamps recently created division
2012-05-18T02:17:09Z

http://news.yahoo.com/buffetts-berkshire-buy-media-general-papers-124240477--finance.html In this May 5, 2012 photo, Warren Buffett, chairman and CEO of Berkshire Hathaway, holds a newspaper as he participates in a newspaper throwing competition prior to the Berkshire Hathaway shareholders meeting in Omaha, Neb. On Thursday, May 17, 2012, Buffett's company Berkshire Hathaway agreed to buy 63 papers from Media General Inc. The Richmond, Va.-based Media General says the $142 million deal includes the Richmond Times-Dispatch and the Winston-Salem Journal. The company is selling all its papers except those in Tampa, Fla., most importantly the Tampa Tribune. (AP Photo/Nati Harnik)Billionaire Warren Buffett's company is making another foray into newspapers, agreeing to buy 63 newspapers from Media General Inc. for $142 million.


" target="_blank">Buffett's Berkshire to buy Media General papers
2012-05-17T18:48:16Z

http://news.yahoo.com/comcast-start-charging-heavy-downloaders-extra-173358196--finance.html Comcast to start charging heavy downloaders extra
2012-05-17T21:27:16Z

http://www.appolicious.com/games/articles/12036-gene-effect-tops-iphone-games-of-the-week Gene Effect tops iPhone Games of the Week
2012-05-17T21:30:00Z

http://news.yahoo.com/insight-got-facebook-ipo-shares-fairness-may-not-043300524--sector.html The loading screen of the Facebook application on a mobile phone is seen in this photo illustration taken in LavignyNEW YORK (Reuters) - A lot of loyal Facebook fans and occasional investors are discovering a hard truth this week: Money and connections talk, especially when it comes to a hot deal handled by Wall Street. The scramble for shares in what is one of largest initial public offerings in U.S. history quickly divided the haves from the have-nots on Thursday. Those with big brokerage accounts and a long history as customers of Wall Street firms likely got at least part of their orders for Facebook shares filled, but would-be buyers who had no such ties were lucky to get any. ...


" target="_blank">Insight: Who got Facebook IPO shares? Fairness may not come into it
2012-05-18T04:33:00Z

http://news.yahoo.com/questions-answers-blockbuster-facebook-ipo-223515589--finance.html An Indian man opens a Facebook page on his mobile phone in Hyderabad, India, Thursday, May 17, 2012. The company's shares are expected to begin trading on the Nasdaq Stock Market on Friday under the ticker symbol A company started in a Harvard dorm room in 2004 has just raised $16 billion and is valued at $104 billion. All that from an initial public offering of stock.


" target="_blank">Questions and answers on blockbuster Facebook IPO
2012-05-18T04:09:05Z

http://news.yahoo.com/facebook-prices-top-range-landmark-ipo-005337198--sector.html A Facebook application logo is pictured on a mobile phone in this photo illustration taken in Lavigny(Reuters) - Investors are bracing for Facebook's Wall Street debut on Friday after the world's No.1 online social network raised about $16 billion in one of the biggest initial public offerings in U.S. history. Valued at $104 billion, Facebook is larger than Starbucks Corp and Hewlett-Packard combined, sparking intense speculation on how much higher its valuation will rise once shares start trading. "A 15 to 20 percent pop is in the realm of possibility," said Tim Loughran, a finance professor at the University of Notre Dame. ...


" target="_blank">Investors brace for Facebook debut on Wall Street
2012-05-18T04:08:58Z

http://news.yahoo.com/facebooks-ipo-one-worlds-largest-233225092--finance.html A Facebook logo is displayed on the screen of an iPad, Wednesday, May 16, 2012 in New York. Facebook's initial public offering is one of the most hotly anticipated in years. The company is likely to have an estimated market valuation of $100 billion when its shares begin trading on the Nasdaq stock market on Friday. (AP Photo/James H. Collins)Facebook is about to find out just how much status updates, puppy photos and billions of "likes" are worth on Wall Street.


" target="_blank">Facebook's IPO one of world's largest
2012-05-18T04:07:58Z

http://news.yahoo.com/yahoos-boss-revamps-recently-created-division-012319945--finance.html Yahoo's new boss revamps recently created division
2012-05-18T02:17:09Z

http://news.yahoo.com/toshiba-plans-double-operating-profit-2014-15-021610802--sector.html Toshiba plans to double operating profit by 2014-15
2012-05-18T02:16:10Z

http://news.yahoo.com/gm-ad-move-followed-failed-facebook-pitch-sources-021312858--sector.html Facebook logos on a computer screen are seen in this photo illustration taken in LavignyDETROIT/NEW YORK (Reuters) - Facebook may only have itself to blame for why General Motors rained on its IPO parade this week. GM announced the decision to drop Facebook paid ads on Tuesday in what was the first highly visible crack in Facebook's strategy and illustrated doubts about its perceived advantage over traditional media. GM's decision followed Facebook officials' failure to convince top marketing executives at the U.S. automaker of the benefits of Facebook's paid ads at a meeting that took place in the past few weeks, people familiar with the meeting said on Thursday. ...


" target="_blank">GM ad move followed failed Facebook pitch: sources
2012-05-18T02:13:12Z

http://news.yahoo.com/reports-hp-poised-eliminate-30-000-jobs-194048870--finance.html Reports: HP poised to eliminate up to 30,000 jobs
2012-05-18T01:31:04Z

http://news.yahoo.com/facebook-share-flippers-risk-missing-future-ipos-005337495--sector.html Facebook share flippers risk missing future IPOs
2012-05-18T00:53:37Z

http://news.yahoo.com/morgan-stanley-ups-facebook-ipo-share-cap-5-005337199--sector.html Morgan Stanley ups Facebook IPO share cap to 5,000
2012-05-18T00:53:37Z

http://news.yahoo.com/factbox-facebook-ipo-numbers-005337687--sector.html Factbox: Facebook and its IPO: by the numbers
2012-05-18T00:53:37Z

http://news.yahoo.com/samsung-gets-9-million-preorders-galaxy-phone-report-003105659--finance.html A man uses Samsung Electronics' new Samsung Galaxy SIII smartphone during its launch in LondonSEOUL (Reuters) - Samsung Electronics Co has received some 9 million pre-orders for its third-generation Galaxy S smartphone from more than 100 global carriers, the Korea Economic Daily reported on Friday. Samsung toppled Apple as the world's biggest smartphone maker in the first quarter, helped by its line-up of Galaxy named devices running on Google's free Android software. The latest version of its flagship phone, unveiled this month, will first go on sale on May 29 in Germany before being rolled out to other countries. ...


" target="_blank">Samsung gets 9 million preorders for new Galaxy phone: report
2012-05-18T00:31:05Z

http://news.yahoo.com/facebook-ipo-did-twitter-crowdsourcing-just-us-closing-001152116.html Facebook IPO: Did Twitter Crowdsourcing Just Give Us the Closing Price?
2012-05-18T00:11:52Z

http://news.yahoo.com/worlds-first-wikipedia-town-launch-wales-180553383--finance.html World's first Wikipedia town to launch in Wales
2012-05-17T23:57:37Z

http://news.yahoo.com/news-summary-facebooks-16b-ipo-among-largest-234211767--finance.html News Summary: Facebook's $16B IPO among largest
2012-05-17T23:42:11Z

http://news.yahoo.com/autodesk-1q-net-income-14-percent-234208569--finance.html Autodesk 1Q net income up 14 percent
2012-05-17T23:42:08Z

http://news.yahoo.com/schilling-game-firm-cant-rhode-island-payment-233907239--spt.html Former MLB player Curt Schilling poses for Reuters at E3 convention in Los AngelesBOSTON (Reuters) - The troubled video game company run by former Red Sox pitcher Curt Schilling failed to make a promised payment to the state of Rhode Island on Thursday when it did not have sufficient funds to cover a check. The office of Governor Lincoln Chafee said that 38 Studios LLC, Schilling's company, hand-delivered a $1.1 million check to the Rhode Island Economic Development Corporation just before the close of business. "Upon learning from the Chief Financial Officer of 38 Studios that there were insufficient funds to cover the payment, the check was returned. ...


" target="_blank">Schilling game firm can't make Rhode Island payment
2012-05-17T23:41:08Z

http://news.yahoo.com/yahoos-boss-dumps-recently-created-division-232534195--finance.html Yahoo's new boss dumps recently created division
2012-05-17T23:37:57Z

http://news.yahoo.com/facebooks-16-billion-ipo-one-worlds-largest-212520548--finance.html Facebook's $16 billion IPO one of world's largest
2012-05-17T23:27:41Z

http://news.yahoo.com/viral-vinyl-amazing-guerrilla-marketing-stunts-fool-media-232509783.html Viral Vinyl! Amazing Guerrilla Marketing Stunts Fool Media [VIDEO]
2012-05-17T23:25:09Z

http://news.yahoo.com/apple-only-green-power-main-data-center-200512595.html File photo of people waiting on street in front of Apple store as they await sales of new iPad in Apple store in Munich(Reuters) - Apple Inc plans to power its main U.S. data center entirely with renewable energy by the end of this year, taking steps to address longstanding environmental concerns about the rapid expansion of high-consuming computer server farms. The maker of the iPhone and iPad said on Thursday it was buying equipment from SunPower Corp and startup Bloom Energy to build two solar array installations in and around Maiden, North Carolina, near its core data center. Once up, the solar farm will supply 84 million kWh of energy annually. ...


" target="_blank">Apple to use only green power for main data center
2012-05-17T23:21:04Z

http://news.yahoo.com/insight-got-facebook-shares-fairness-may-not-come-210950655--sector.html The loading screen of the Facebook application on a mobile phone is seen in this photo illustration taken in LavignyNEW YORK (Reuters) - A lot of loyal Facebook fans and occasional investors are discovering a hard truth this week: Money and connections talk, especially when it comes to a deal handled by Wall Street. The scramble for shares in what is one of largest initial public offerings in U.S. history quickly divided the haves from the have-nots on Thursday. Those with big brokerage accounts and a long history as customers of Wall Street firms likely got at least part of their orders for Facebook shares filled, but would-be buyers who had no such ties were lucky to get any. ...


" target="_blank">Insight: Who got Facebook shares? Fairness may not come into it
2012-05-17T23:15:33Z

http://news.yahoo.com/un-brazil-host-internet-debate-green-planet-231113204.html Brazilian Foreign minister Antonio Patriota shows a map as he speaks during a hearing on Rio 20 Summit on May 10The United Nations and the Brazilian government are launching an Internet debate around 10 themes for a green planet to elicit suggestions from experts and the public for next month's Rio 20 summit.


" target="_blank">UN, Brazil to host Internet debate on green planet
2012-05-17T23:11:13Z

http://news.yahoo.com/europe-vs-facebook-group-gathers-comments-privacy-battle-230446786.html Facebook on May 11 published changes to its privacy policyThe campaign Europe-vs-Facebook, run by an Austrian law student, said Thursday it had gathered the 7,000 comments required for the social networking website to review its privacy policy.


" target="_blank">Europe-vs-Facebook group gathers comments in privacy battle
2012-05-17T23:04:46Z

http://news.yahoo.com/more-twice-many-tweets-supported-gay-marriage-opposed-230200096.html More Than Twice as Many Tweets Supported Gay Marriage Than Opposed ItThe tweeting masses are on board with the cause of the moment, gay marriage, by a roughly 2.6-to-1 margin, according to a report from Pew's Project for Excellence in Journalism. It looks at tweets from May 7, the day after Joe Biden became "absolutely comfortable" with gay marriage, to May 11, two days after Obama's announcement of his own support. ...


" target="_blank">More Than Twice as Many Tweets Supported Gay Marriage Than Opposed It
2012-05-17T23:02:00Z

http://news.yahoo.com/twitter-peanut-gallery-roasts-facebook-ipo-225416966.html On Twitter, Peanut Gallery Roasts Facebook IPO
2012-05-17T22:54:16Z

http://news.yahoo.com/ea-must-defend-ncaa-conspiracy-lawsuit-223504450--finance.html EA must defend NCAA conspiracy lawsuit
2012-05-17T22:35:04Z

http://news.yahoo.com/verizon-data-fans-pay-more-phones-223011120--sector.html A Verizon logo is seen during the International CTIA WIRELESS Conference & Exposition in New Orleans, LouisianaNEW YORK (Reuters) - Verizon Wireless plans to make its data-hungry customers pay a lot more, either in service fees or smartphone prices, as it tries to cut costs and boost revenue from data services. The No. 1 U.S. mobile provider said it will eliminate unlimited data plans for all customers who upgrade their cellphone at a discounted rate, potentially driving more business to its smaller rival Sprint Nextel . Only customers who pay full price for their cellphones will be able to keep unlimited data service plans for a flat monthly fee of $30 a month. ...


" target="_blank">Verizon data fans to pay more in service or phones
2012-05-17T22:30:11Z

http://news.yahoo.com/4-steps-cultivating-online-trust-223001749.html 4 Steps to Cultivating Online Trust
2012-05-17T22:30:01Z



© 2006 - Present - iArticleBeach.com - Free Articles for Reprint. Add great content to your web site today. All Rights Reserved. Use of our service is protected by our Privacy Policy and Terms of Service
Learn to profit from niche markets