Mutual Funds
Goal
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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
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Growth
Aggressive Growth
Value
Income
Equity-Income
Bond
Asset Allocation
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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
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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