Latest news with #fundmanagers
Forbes
2 days ago
- Business
- Forbes
What Is A Mutual Fund? How They Work And How To Invest For Beginners
Many investors achieve their investment goals using just mutual funds because of their breadth of ... More options, relatively low costs and ease of use. Mutual funds are an accessible investment vehicle which provides average or advanced investors with a wide range of exposure and diversification to a vast swathe of investment options from equities to commodities to bonds. Investors can delve deeper into specific sectors or sub-categories of funds in these categories, choose passive or active funds, and shop for ideal fee structures. In this guide, you'll gain an introduction to mutual funds including their advantages, risks, categories and how to buy your first mutual fund share. What Is A Mutual Fund? A mutual fund is an investment vehicle which pools money from investors and invests into securities like stocks and bonds to achieve the funds' objectives whether this is tracking an index or providing diversified exposure to a particular asset class. Mutual funds trade just once per day at the funds' net asset value (NAV) unlike stocks or ETFs which trade during market hours on an exchange. Mutual funds are managed by professional teams and can range from low expense ratio passive funds which track an index to actively managed funds who charge higher minimums and expense ratios as they try to beat a benchmark. How Do Mutual Funds Work? Mutual funds are managed by teams who manage the operations of the fund from choosing investments, rebalancing holdings and managing cash flow. As mentioned, when you buy or sell shares in a mutual fund they trade at the end-of-day NAV and aren't actively traded during the day like a stock or ETF. Index funds are a type of mutual fund which just passively tracks an index like the Nasdaq-100 while actively managed funds charge higher fees as they try to beat a benchmark. Types Of Mutual Funds To Know There are a number of types of mutual funds distinguished by the assets they invest in and the goal of the fund, like equity funds which invest in stocks, to ESG funds which invest in stocks based on a company's adherence to particular standards. Equity funds are mutual funds investing in stocks with the goal of appreciating capital. These funds are often distinguished by growth or value focus, by investing in particular sectors of the stock market, or investing in particularly-sized companies. Equity funds are ideal for investors focused on long-term portfolio growth as they're more volatile but usually deliver higher returns than fixed-income funds. Fixed-income funds pool investor money to buy bonds to deliver ensuing interest from these bonds to investors. These funds can invest in particular types of bonds like government or corporate bonds to provide concentrated exposure to a bond type while diversifying across many bonds or a mix of bond types to provide even greater diversification and reduce risk. Fixed-income funds are commonly invested in by investors who wish to earn more income or reduce volatility in their portfolio if they're heavily invested in riskier assets like stocks. Money market funds aim to deliver some yield for investors while maintaining a NAV of $1 by investing in Treasury bills or other short-term investments like high-grade commercial paper. These funds are often used in brokerage accounts as a short-term holding place which earns interest before investors invest in other assets. Target date funds are a useful mutual fund type for investors who wish to invest in a single fund for life which shifts from more growth and equity heavy to more conservative and fixed-income heavy as the investor inches to retirement age. These funds are commonly used by investors who don't wish to manage their own portfolio diversification, particularly in a 401(k) account. Commodity funds provide exposure to the price moves of specific commodities like gold, oil or a mix of commodities. These funds will invest directly in the commodity, buy commodity futures contracts or by simply owning stocks linked to the commodity. These investments can be useful to diversify a portfolio or hedge against inflation but they still bear risk like price drops for specific commodities like new discovery of oil increasing global supply, and thus dropping oil prices. ESG, or environmental, social and governance, funds are a popular mutual fund type with socially-conscious investors who wish for their investments to align with their values. These funds will research and evaluate companies for how they align with certain benchmarks like how sustainable they are, how diverse their boards are or how they treat workers. Benefits Of Investing In Mutual Funds There are five main benefits of investing in mutual funds from ease of diversification to fast liquidity in case you need to cash out of your position. A principal benefit of investing in mutual funds is the diversification that one or multiple mutual fund positions can provide. By purchasing a share you can own percentages in hundreds of stocks, helping you diversify and reduce risk in concentration. With ownership of multiple mutual funds dedicated to different asset types, sectors or categories, you can reduce volatility and ensure portfolio diversification. Another benefit that mutual funds provide is the professional management of mutual funds by investment teams all working to ensure risks are mitigated, investments are well researched and the right trades are executed. This is especially useful for investors who don't have the time or expertise to manage a portfolio of hundreds of stocks and assets themselves. In addition to diversification and professional management, mutual funds provide a high level of accessibility to the average investor. With as little as $100 in brokerage accounts and IRAs, investors can own shares of hundreds of stocks, and 401(k)s often waive these minimums, making it even easier to get started. Like many stocks, mutual funds are also highly liquid, allowing investors to sell shares by the end of the business day when the market closes. This daily liquidity makes it easy to close a position if you need to access cash, rebalance your portfolio or invest in a new opportunity in just a day. When you invest in mutual funds which pay dividends you'll also access the ability to reinvest dividends, which are paid out or other distributions, ensuring you can compound your investment. Many brokerage accounts will offer a Dividend Reinvestment Program (DRIP) which is an often free program where dividends are reinvested without fees, and fractionally if the dividend isn't enough for a full share. Risks Of Investing In Mutual Funds While mutual funds are generally considered less risky investments, there are a few risks you should bear in mind before determining if mutual funds in general or specific mutual funds are right for you. A primary risk of mutual funds, common with securities in general, is the risk of share prices falling based on the assets' lowered value. For example, equity mutual funds will fall when the stock market or a particular sector dips or a commodity fund will fall if that particular commodity's price falls based on some global event. Risk is inherent with most investments so knowing your risk tolerance and balancing your portfolio will help hedge against market risk. If you choose to invest in an actively-managed fund, know that your fund can outperform a benchmark but it can also underperform due to manager risk. Whether the fund manager loses key personnel or makes a mistake, this can affect the return of your fund. If your chosen mutual fund is focused on investing in an asset with lower trading volume than say, a major index, like small-cap stocks, the fund may experience lower liquidity in the event of a sell-off, resulting in a lower NAV from sales at unideal prices. While mutual funds are required to follow liquidity management plans, unexpected events can affect NAV negatively. Interest rate risk is most acutely felt with fixed-income funds when interest rates rise causing fixed payouts from the fixed-income fund to not be a worthwhile investment causing a sell-off. This risk can be mitigated by investing in a mix of bond or fixed-income funds by time horizon so you can ride out dips from interest rate increases. Costs And Fees To Understand The main cost of mutual funds are expense ratios which are a percentage of assets that fund managers will charge annually to pay for operating costs, typically under 0.20% for passive funds, but as much as over 1% for actively-managed funds. Two other fees you may run into are load fees which are fees charged when you make an initial investment in some mutual funds and redemption fees which are charged if you cash out a position in certain mutual funds. Finally, other fees may arise with some mutual funds like 12b-1 marketing fees, so it's always crucial to read a fund's prospectus to fully comprehend the true cost of a fund versus potential returns. How To Invest In A Mutual Fund Below are the five steps to get started investing in mutual funds from determining your investing intent to placing your order and monitoring your performance. Laying out your goals will help you determine the right mutual fund type for you. For example, knowing the goals you have in mind as well as knowing your risk tolerance, what your current portfolio mix is, and how long you're investing for will help you figure out whether you need to be more risk-averse with more invested in bond funds or more growth minded with equity funds. Choosing the right account to invest in your mutual fund will be tied to your investment goals. For example, if you're saving for a home, you should invest through a taxable brokerage account but if you're investing for retirement, you should invest in your 401(k) or IRA. If you're investing for a child's college savings, you should choose a 529 plan and if you're saving for future health costs, invest through your HSA. Next, research available funds in either the brokerage's research tools or a third-party tool like Yahoo Finance or Morningstar, including how the fund performs against benchmarks, what fees are charged and what the fund's portfolio is made up of. Read through the fund's prospectus to make sure it aligns with your investment objectives and see if there are any better mutual funds available. Enter the ticker symbol in your brokerage account trading window, select how much you want to invest, and determine whether you want to reinvest dividends or not. Confirm the settlement rules and check that all fees or penalties are as you expected before you submit the trade. Finally, monitor the performance of your mutual fund by reviewing how it performs quarterly, gauging how it performs against the benchmark, and tracking if there's been any drastic changes in fees. Be confident in your research but assess the performance over the quarters to track any price changes and why they occurred. Bottom Line As you've learned, mutual funds are an excellent investment vehicle regardless of your experience, level of capital or asset preference. Many investors have and will achieve their investment goals using just mutual funds because of their breadth of options, relatively low costs and ease of use. With the information in this guide, you're better armed to achieve your investment goals too, whether you choose to get started with passive or actively-managed mutual funds or another investment vehicle of your choosing. Frequently Asked Questions (FAQs) Are Mutual Funds Safe? All investments bear the risk of loss of some or all of your principal investment, but mutual funds are generally considered a safer investment as they offer diversification and are regulated by the SEC. What Is The Minimum To Invest In A Mutual Fund? The minimum to invest in mutual funds can range depending on the mutual fund and whether your brokerage account provides fractional investment in mutual funds. If you can fractionally invest, you can pay just $1 to invest, while mutual funds themselves can allow for a minimum investment of up to $100 if they offer low minimums, or $500 to $10,000 if they have a high minimum. Can I Lose Money In A Mutual Fund? Yes, you can lose money in a mutual fund as the net asset value (NAV) of these funds can rise and fall depending on the market. Even a bond mutual fund can lose value if interest rates rise, causing a fall in bond prices and the corresponding NAV of the fund. Are Index Funds Different From Mutual Funds? Index funds are a type of mutual fund which tracks a particular index like the S&P 500 index. Index funds often charge lower expense ratios and are useful for passive, diversified portfolio construction.
Bloomberg
4 days ago
- Business
- Bloomberg
Foreigners Bought Almost €100 Billion of Euro Area Debt in May
Overseas buyers scooped up almost €100 billion ($116 billion) of euro-area debt in May, the most since 2023, as the upheaval over US tariffs drove investors to Europe. The data, published on Friday by the European Central Bank, shows fund managers were seeking the safety of German bunds in the week's following President Donald Trump's 'Liberation Day' announcement. The May total has only been exceeded in three other occasions since records began in 2013.
Times
5 days ago
- Business
- Times
Is Templeton Emerging Markets Investment Trust worth buying?
T he emerging markets category is one of those asset buckets beloved of fund managers but it doesn't always make huge sense to end-investors looking for a convincing theme. Not much connects India with Chile, say, or the United Arab Emirates with Taiwan. The very fact that the investment world categorises wildly diverse developing nations in this way gives it a kind of logic, however. Flows matter. If big institutions allocate more to the emerging markets bucket, everything in the bucket benefits. And if the recent rebalancing of portfolios away from the super-dominant US carries on, every other market can expect a bit of a boost, including emerging markets. A wider rethink about the asset class has been a long time coming. From about 2010 until very recently emerging markets had seriously unperformed, and the bull and bear cycles can last a long time. Emerging markets boomed in the 1980s, lagged in the 1990s and boomed again in the 2000s.
Entrepreneur
6 days ago
- Business
- Entrepreneur
How Tokenization Is Reshaping the Future of Investing
Tokenization is a growing trend in the industry. Here's why it will only reach its potential through utility, not hype. Opinions expressed by Entrepreneur contributors are their own. My investment journey started over 10 years ago. Having invested in over 200 companies since then, I couldn't help but realize the need for a better infrastructure to close my deals. I'd set up a lot of SPVs and tools, and I invested in other providers building tools for investors and fund managers, but I needed fast, efficient and customized platforms. However, the platforms I was looking for did not yet exist, so I adapted by creating my own tools to facilitate a smoother investment experience. This was when I realized that the tools I had developed presented an opportunity that met a significant market demand, specifically in the area of tokenization. With a forecast to reach US$16 trillion by 2030, tokenized assets are tapping into a new generation of finance that extends beyond trading to include accessibility, compliance and more. From there, I found myself leading a venture that had tokenized over US$2 billion worth of assets for 20,000 investors across more than 1,500 funds. Related: The Tokenization Revolution: Reshaping How We Own and Trade Assets More to assets than just trading While the projected value of tokenized assets elicits much excitement, it's crucial to examine what tokenization entails from a utility standpoint, so as not to lose potential in the excitement. Understanding why assets belong on the blockchain needs to go beyond the view of "digital wrappers" that are idle in wallets. Tokenization must be viewed as a key to doors that were once inaccessible, providing opportunities that were once unrealistic. A good example of a door unlocked by tokenization is the tokenized stock exchange, a digital marketplace where traditional shares are converted into blockchain-based tokens. What this unveils is a quicker, more accessible and streamlined trading experience that transcends geographical borders and financial limitations. Tokenized stocks offer investors globally the opportunity to own a slice of U.S. technology leaders, including Apple, Amazon or even a private company like SpaceX, without the need for a U.S. brokerage account. Tokenization will also permit 24/7 trading of public stocks from anywhere in the world. For private stocks, it will unlock significant liquidity for pre-IPO companies, which until now were viewed as very illiquid investments. With geographical borders being removed, financial ceilings are also being lifted as high-priced assets are broken down into smaller units, bringing liquidity to markets that are typically difficult to trade. Take, for example, properties with multi-million-dollar value, and how fractional ownership can enable liquidity from retail investors. Related: Why Your Business Assets Belong on the Blockchain What about compliance? The promise of tokenization, valued at US$16 trillion, is achieved through steps that consider not only utility but also due diligence and precaution. The truth remains that this is a nascent technology with much regulatory ambiguity and global inconsistencies. While the U.S. views digital tokens as securities under the jurisdiction of the SEC, some countries in Asia have yet to develop detailed regulations governing these tokens. Countries are rushing to regulate the space, which drives even more adoption and safety to the industry. As an example, the U.S. Senate is looking to pass the Broker-Dealer Tokenization Act, a bill that would allow broker-dealers to operate in the tokenization space with a well-defined legal framework. This is where one of the most potent elements of tokenized securities comes into play: the ability to directly encode compliance and regulatory requirements into the asset using smart contracts. This embeds compliance in a manner that reduces regulatory overhead, while ensuring market integrity is sustained, and delivers an efficient use of real-world assets among developers and end-users. Exclusivity erodes through utility The norm thus far has been one of exclusive access to primary investment instruments; however, this exclusivity will soon erode due to the advent of tokenization. While we recently saw news about the Circle IPO and other high-ticket crypto projects, the story was yet another case of institutional investors being the early birds that get the worm, as each share was priced at US$31 pre-IPO, opened at US$69, and closed its first day at US$83.23. The arrival of tokenized equities, bonds and yield-bearing instruments is likely to cater to the appetite of both institutional and retail investors, with a lowered entry barrier, broadened access and a shift in opportunities for wealth creation. With tokenization gradually percolating the financial processes of today's economy, it would be no surprise to see the next game changer be access to early-stage gains, such as that of Circle's IPO. Related: How This Finance Guru Created A Breakthrough Financial Service Platform The next generation of finance Moving forward in a world that is growing increasingly tokenized, we're already noticing shifts in the likes of tokenized private credit, with platforms having pushed the volume of on-chain loans beyond US$13 billion in assets under management. This creates an inversion of the old mortgage model, where the token is liquid collateral tracked in real time and the borrower is priced by the pool. Invoices, revenue-share agreements and more can now be cleared in minutes on platforms that are monitored in real-time. The approach of constantly online collateral can also be seen in the corporate world, with tokenized U.S. treasures having reached US$7.2 billion. If this isn't enough, then JPMorgan's first public blockchain treasury trade most definitely provides clear proof of concept. These are some examples that demonstrate how tokenization can unlock the next generation of finance, tapping into the massive potential of this nascent space. The unicorns of tomorrow are those who see in this technology the opportunity to not just tokenize, but to enable the productivity of the assets tokenized in a manner accessible to all with transparency, compliance and security baked into its core.
Yahoo
7 days ago
- Business
- Yahoo
3 reasons investors are moving on from the trade war
Global investors just aren't that worried about Trump's trade war anymore. Fund managers were the most bullish in July since Trump first went into office, according to a BofA survey. That's due to factors like falling expectations for a recession and optimism for AI. President Donald Trump's trade war is starting to feel like old news for markets. Bank of America's monthly global fund manager survey, published on Tuesday, showed that investors have largely moved past the fear of tariffs and are feeling good about the stock market again. A sentiment reading of fund managers surveyed from July 3 to July 10 rose to 4.3 from 3.3 in the last month, the most positive investors have felt about the market since February, early in Trump's new term and months before the worst of the tariff volatility rocked markets. That boost in sentiment comes even as Trump's latest volley of tariff threats reignites uncertainty around the trade war. More than half—53%—of fund managers said they believed the final tariff rate the US would impose on the rest of the world would hover around 15%, up from the 10% rate investors expected in June. And yet, most investors aren't too worried about the prospect of higher tariff rates. Here's what they're thinking about instead. Investors aren't worried about a global recession. The percentage of investors who believed a global recession is likely in the next year dropped to its lowest level in five months, according to BofA's survey. The percentage of investors who believed a global recession was unlikely also grew to 59%. Meanwhile, 65% of fund managers said they believed the most likely outcome for the world economy was a soft landing, a slight economic slowdown that avoids an outright recession. Twenty-one percent of investors said they believed the most likely outcome was a "no-landing," a situation in which inflation comes down and the economy continues on a path of uninterrupted growth. Investors are also feeling pretty good about the picture for corporate earnings growth. Forty-two percent of fund managers in the BofA survey said they believe earnings-per-share would surprise to the upside for the second quarter, compared to 19% of investors who said they believed earnings would likely surprise to the downside. The outlook for earnings has brightened in recent weeks. Morgan Stanley's gauge for earnings revisions breadth has climbed from -25% in mid-April to 3%, analysts at the bank wrote in a note on Monday. "The vibe right now is: underpromise and overdeliver," Hardika Singh, an economist strategist at FundStrat, wrote in a note on Tuesday. "And given that there is now more clarity on what's happening with tariffs, it's not an unrealistic scenario," she said of earnings beats. The hype for artificial intelligence is still strong — and some investors think the economy is already starting to reap the benefits. Forty-two percent of fund managers said they believed productivity was already rising from AI use, while 21% said they believed productivity would rise as soon as next year. Meanwhile, the Roundhill Magnificent Seven ETF, which tracks the seven mega-cap tech firms, has rallied nearly 40% from its low on April 8. "The market has become numb to the administration's moves and is instead focusing on AI, tech and corporate America's ability to adapt and be nimble," Skyler Weinand, the chief investment officer at Regan Capital, wrote in a note on Tuesday. Read the original article on Business Insider Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
