Monday, December 15, 2008

Market Transparency

As a result of that all, no one went to jail. Most of these actions were violations of civil laws, not criminal. The cases were settled, the Attorney General or SEC has struck deals with fraudulent companies and they have paid penalties and fines. Sure, some people have lost their jobs and could never work in the same industry again.
Nevertheless, people do not have to hurry up and change their investments. That can be a very wrong move. To benefit, you have to wait to learn more about your mutual funds and their activities. Many investors do not know exactly what to do with their shares and that is why mutual funds with their expert management are still the best choice.
Understanding Mutual Funds. There are some essential principles that can bring an intelligent investor to great distributions. One more characteristic feature of mutual funds is that they somehow protect the investor and increase the return without increasing the risk. People who want to put their money in some securities, should always keep in mind that only steady and timely research can help to add value and not to lose. Investment decisions should be effective and only transparency on the market can put them into effect.

Thursday, November 20, 2008

Vanguard Group

John Bogle and the Largest Mutual Funds Organization.

John Bogle is considered one of the most influential and big-gun personalities in the stock market. Thanks to his contribution to investment history, most of people have changed the ways they were investing their money. His main idea was to decrease the costs of investing. In 1974 he founded the company named Vanguard Group which is the largest investment management company in the world. John Bogle has launched the very first index fund that enabled ordinary investors to put their money in. At the present time, this fund is the largest mutual fund in the world. This success traces traces its roots back to 1951, when John Bogle wrote his senior basis at Princeton University. The Princeton alumni has developed a unique corporate structure that replaced less efficient old one. John Bogle was leading the company that fired him in 1974 and he founded his own one – the Vanguard Group. And then this person saw a bright future for investment industry in making funds independent and keeping the costs of investing down. And then in 1975, the first market mutual fund started its operations. The first market mutual fund made a revolution in the industry: investors did not have to pay sales charges, management fees, and transaction costs. The first market mutual fund started a new era with small operating costs and high tax efficiency. The investors started to trust more in mutual funds. Since then, they have a pretty deep insight in what the mutual fund company is doing and what its investment strategy is like. This total fallacy in the middle of 1970s turned out to be the doctrine in 2000. The Vanguard Group has introduced the new environment at the market. Now many mutual funds has this investment strategy that John Bogle has once introduced: simple and time-tested, that can outperform and bring the biggest distributions. According to Bogle, the more simplicity in investing, the higher the level of profits. The importance of low costs is crucial.

Wednesday, November 5, 2008

Mutual Funds Gamble

Gambling or Calculation?

There is a huge number of differnt reasons why people want to invest their money and to undertake some risk. Some of them just want to make much of investment to add value to their assets, other people want to make their future more riskless and shielded, others want to pay for their homes and vehicles. And moreover, such a saying: nothing venture, nothing have almost does not work with mutual funds.
Sure, the financial crisis creates some wild swings at the stock market and at the present time it is difficult to convince investors in stability of whatever. Although, new researches show that many experienced investors stay invested in mutual funds. There is a number of mutual funds research companies that keep investors aware of the events that take place at the stock market. Strategic Insight is one of them. This company reports that mutual fund cash inflows keep on picking up and in 2007 the demand of investors for mutual funds reached a record high. Trim Tabs Investment Research Company publishes the same information and notes that investors progressively gravitated toward mutual funds during the recent ruptures in the credit markets.

Thursday, October 23, 2008

Mutual Funds

What is Mutual Funds?

People should distinguish between three main types of investment companies. These organizations that focus on issuing in investing in securities divide into mutual funds, closed end funds and unit investment trust. Mutual funds are also known as open end organizations.
Mutual fund is an investment vehicle that lets many investors to pool the money. And then mutual fund enables these investors to have it jointly managed by an investment manager.
In general, the process of investing looks like this: a company recieves the money from investors and then it invests this money in some industry. An investment company deals with the money on the collective basis. Each investor is entitled to a "pro rata" share and participates in the profits and losses. Mutual fund distributes its income each year to avoid taxation. A distribution consists of capital gains, interest and dividend income. Distributions can be made monthly.

Tuesday, July 15, 2008

Fund of Funds

Fund of Funds are not perfect though, they come with their own unique drawbacks. The first to come to mind is the double layer of fees. When dealing with FoF, an investor must understand that the underlying funds charge a fee, as well as the Fund of Funds manager. This translates to “layers” of fees before the investor receives dollar one. Transparency issues are also important. Research such as the individual manager’s background and reputation, the nature of the investments that they are utilizing, and more are all issues a fund of fund manager must investigate. Therefore, you are relying on the FoF manager’s talent and expertise in choosing managers, when investing.

Saturday, July 12, 2008

High Watermark

A "high water mark" is often applied to a performance fee calculation. This means that the manager does not receive performance fees unless the value of the fund exceeds the highest net asset value it has previously achieved. For example, if a fund were launched at a net asset value (NAV) per share of $100, which then rose to $130 in its first year, a performance fee would be payable on the $30 return for each share. If the next year it dropped to $120, no fee is payable. If in the third year the NAV per share rises to $143, a performance fee will be payable only on the extra $13 return from $130 to $143 rather than on the full return from $120 to $143. This measure is intended to link the manager's interests more closely to those of investors and to reduce the incentive for managers to seek volatile trades. However, this mechanism does not provide complete protection to investors: a manager who has lost money may simply decide to close the fund and start again with a clean slate assuming that he can persuade investors to trust him with their money. Some funds also specify a hurdle rate, which states that the fund will not charge a performance fee until its annualized performance exceeds a benchmark rate, such a fixed percentage, over some period. This links performance fees to the ability of the manager to do better than the investor would have done if he had put the money elsewhere. Funds which specify a soft hurdle rate charge a performance fee based on the entire annualized return. Funds which use a hard hurdle rate only charge a performance fee on returns above the hurdle rate.

Thursday, July 10, 2008

Hedge Fund Regulations

Although the SEC is currently examining how it can address the Goldstein decision, commentators have stated that the SEC currently has neither the staff nor expertise to comprehensively monitor the estimated 8,000 U.S. and international hedge funds. One of the commissioners of the SEC has stated they are forming internal teams that will identify and evaluate irregular trading patterns or other phenomena that may threaten individual investors, the stability of the industry, or the financial world.

In February 2007, the President Bush's advisory group on Financial Markets rejected further regulation of hedge funds and said that the industry should instead follow voluntary guidelines.