Latest news with #mutualfunds
Yahoo
6 hours ago
- Business
- Yahoo
How Much Does It Matter Which Investment Fund You Pick? (And How To Pick a Good One)
The decision to invest is a relatively easy one — you want to save money for a future purchase or for a comfortable retirement, and you want that money to make more money for you. So, you decide to invest it. That's the easy part. Find Out: Try This: But then you need to decide what to invest in. You could buy stocks, bonds, mutual funds, bitcoin, collectables, commodities — the list goes on and on. Mutual funds are the best solution for many circumstances. They are readily available, easy to own and trade, and offer instant diversification. But which mutual fund — or funds? In 2023, there were 7,222 mutual funds in the United States, according to Statista. Which one(s) should you choose? Does it matter? How do you decide? It's easy to assume all mutual funds are more-or-less the same, but they can vary widely in terms of risk, performance and fees. Investing in the wrong fund could mean your time horizon doesn't match, potentially leading you to make withdrawals in a down market, or it could mean you end up paying far more in fees than you might otherwise, among other differences. Here's what you need to know about the factors that should go into determining which investment fund(s) you should choose. For You: The first question to ask yourself is what you hope to accomplish by investing. Do you want to earn enough money so you can eventually live off your returns and never touch your principal? You'll need a relatively aggressive fund that reinvests dividends. Do you want your investments to generate income you can use to supplement your paycheck? Look for a fund made up of dividend stocks. Do you want something that's nearly a sure thing, earning a relatively small return but with little danger of losing money? A bond fund may fit the bill. The amount of time you plan to invest for can make a difference in what type of investment you choose. If you have a short time horizon, say three years or less, look for low-risk investments like bond funds. These have a guaranteed rate of return, so you won't run the risk of having to withdraw your money in a down market. If you plan to stay invested for 20 years or more, you can look at stock mutual funds that include investments that are more volatile. Understanding your risk tolerance is critical, not only to your investing success, but to your mental health. If you plan to invest over the long term, you also need to be able to sleep at night, so it's important to know how much risk you feel comfortable taking. If you have a high risk tolerance, you are willing to invest in more volatile funds, which will inevitably lose money at some point. You need to be comfortable watching your portfolio value go down — sometimes to less than the amount you originally invested — with the understanding that it may go up significantly in the future. If you are only comfortable with investments that will preserve your original investment, your risk tolerance is low, and you should invest accordingly. Your portfolio will likely grow more slowly, but you won't be in a position where your original investment is in jeopardy. Mutual fund companies have expenses and charge fees, because they need to make money in order to operate. These fees and expenses can take a chunk out of your investment returns, so it's important to understand how much you'll be paying and to choose a fund that has the right mix of potential returns and expenses. Mutual funds will have operating costs, like investment advisory fees, brokerage fees, marketing expenses, custodial fees and more. These costs are typically paid out of the assets of the fund, so you won't see a charge on your statement for these. They do, however, reduce your return on the investment, so you're paying them indirectly. These expenses are grouped together under the category of annual fund operating expenses. You will also pay a sales charge, which is a percentage of the amount you invest, exchange or transaction fees when you trade funds, an account fee and other fees. These are collectively referred to as shareholder fees. All of these fees and expenses should be outlined in the prospectus you receive before you invest in a particular fund. When you are considering which fund to invest in, be sure to compare the fees and expenses. Every investor knows — or should — that past performance is not a guarantee of future results. In fact, that statement is at the bottom of virtually every informational or marketing piece for every investment. And it's true. However, those funds that do well are typically well-managed by managers who know what they're doing, so a high performing fund may be a better option that one that consistently under-performs. One way to evaluate a fund's performance is against a benchmark like the S&P 500. If you feel that this comparison is difficult or inadequate, you can invest in an index fund that tracks the performance of the S&P 500 or one of many other indices. You won't beat the benchmark, but your return should just about equal it. It's a good idea to understand the differences between various investment funds and how they can impact your return, and you should compare like funds before deciding to invest. But at the end of the day, the difference in your return — at least between two or more funds that are right for your objectives, time horizon and risk tolerance, and that are similar in performance — is likely to be relatively small. Don't let paralysis by analysis prevent you from investing. More From GOBankingRates Surprising Items People Are Stocking Up On Before Tariff Pains Hit: Is It Smart? 5 Cities You Need To Consider If You're Retiring in 2025 This article originally appeared on How Much Does It Matter Which Investment Fund You Pick? (And How To Pick a Good One) 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
Forbes
2 days ago
- Business
- Forbes
How To Avoid The Worst Sector Mutual Funds In Q2 Of 2025
Question: Why are there so many mutual funds? Answer: Mutual fund management is profitable, so Wall Street creates more products to sell. The large number of mutual funds has little to do with serving your best interests as an investor. I leverage this data to identify two red flags you can use to avoid the worst mutual funds: Mutual funds should be cheap, but not all of them are. The first step is to benchmark what cheap means. To ensure you are paying at or below average fees, invest only in mutual funds with total annual costs below 1.84%, – the average total annual costs of the 622 U.S. equity Sector mutual funds my firm covers. The weighted average is lower at 1.15%, which highlights how investors tend to put their money in mutual funds with low fees. Figure 1 shows Saratoga Financial Services Portfolio (SFPAX) is the most expensive sector mutual fund and Fidelity Real Estate Index Fund (FSRNX) is the least expensive. Saratoga provides five of the most expensive mutual funds while Vanguard mutual funds are among the cheapest. Figure 1: 5 Most and Least Expensive Sector Mutual Funds Worst Sector Mutual Funds in 2Q25 New Constructs, LLC Investors need not pay high fees for quality holdings. Fidelity Advisor Energy Fund (FIKAX) is one of the best ranked sector mutual fund overall. FIKAX's neutral Portfolio Management rating and 0.71% total annual cost earns it a very attractive rating. On the other hand, Vanguard Real Estate II Index Fund (VRTPX) holds poor stocks and receives an unattractive rating, yet has low total annual costs of 0.10%. No matter how cheap a mutual fund, if it holds bad stocks, its performance will be bad. The quality of a mutual fund's holdings matters more than its price. Avoiding poor holdings is by far the hardest part of avoiding bad mutual funds, but it is also the most important because a mutual fund's performance is determined more by its holdings than its costs. Figure 2 shows the mutual funds within each sector with the worst holdings or portfolio management ratings. Figure 2: Sector Mutual Funds with the Worst Holdings Most Expensive Sector Mutual Funds in 2Q25 New Constructs, LLC Vanguard, T. Rowe Price, and Fidelity appear more often than any other providers in Figure 2, which means that they offer the most mutual funds with the worst holdings. Jacob Internet Fund (JAMFX) is the worst rated mutual fund in Figure 2 based on my predictive overall rating. BNY Mellon Natural Resources Fund (DLDYX), Vanguard Utilities Index Fund (VUIAX), LDR Real Estate Value Opportunity Fund (HLRRX), and Fidelity Select Defense and Aerospace Portfolio (FSDAX) also earn a Very Unattractive predictive overall rating, which means not only do they hold poor stocks, they charge high total annual costs. Buying a mutual fund without analyzing its holdings is like buying a stock without analyzing its business and finances. Put another way, research on mutual fund holdings is necessary due diligence because a mutual fund's performance is only as good as its holdings. PERFORMANCE OF MUTUAL FUND's HOLDINGs – FEES = PERFORMANCE OF MUTUAL FUND
Bloomberg
3 days ago
- Business
- Bloomberg
Wall Street's Rush to Launch Vanguard-Style Funds Draws Warnings
Exchange-traded funds have amassed trillions of dollars by offering investors greater tax efficiency, liquidity and lower costs than mutual funds. Now, a looming regulatory shift is poised to bring the two vehicles closer together — and threatens to complicate the very features that fueled the ETF boom. The US Securities and Exchange Commission is expected to approve applications for dual-share-class structures, perhaps as soon as this summer, allowing managers to add an ETF sleeve to an existing mutual fund. More than 50 firms, including BlackRock Inc. and State Street Corp., are waiting for the regulator's greenlight to deploy the hybrid structure — made possible after Vanguard Group Inc. 's exclusive patent expired two years ago.
Yahoo
5 days ago
- Business
- Yahoo
China approves Qatar's 10% stake purchase in ChinaAMC
China's regulatory authority has greenlit the Qatar Investment Authority (QIA) to acquire a 10% stake in China Asset Management (ChinaAMC), the nation's second-biggest mutual fund manager in terms of assets. The China Securities Regulatory Commission announced on 22 May that there is no objection to Qatar Holdings, a wholly-owned subsidiary of QIA, acquiring the stake, reported Yicai Global. Once the deal is finalised, Qatar Holdings will emerge as the third-largest shareholder in ChinaAMC, trailing Citic Securities, which owns 62%, and Mackenzie Investments, with a 28% stake. Qatar Holdings will acquire the shares from Tianjin Haipeng Technology Consulting, owned by Hong Kong-based Primavera Capital. Set up in Beijing in 1998, ChinaAMC manages 471 fund products with a total net asset value of 1.9tn yusn ($264.6bn) as of 31 March, ranking second in the Chinese asset management market after E Fund Management. QIA, established in 2005, is the ninth-largest sovereign wealth fund globally, with assets of $526bn, according to the Sovereign Wealth Fund Institute. QIA has made several investments in Chinese companies, including a $200m investment in Kingdee International Software Group in December 2023. Huichen Asset Management fund manager in Shanghai Dai Ming, as reported by SCMP last month, said: 'For the Middle East nations, they want to reduce their reliance on the US. So strengthening [links] with China is a good option that can probably bring mutual openness. For China, it is also urgent to diversify and look for new trade partners. The Middle East has lots of money in hand and can bring investment.' "China approves Qatar's 10% stake purchase in ChinaAMC " was originally created and published by Private Banker International, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site.
Al Arabiya
23-05-2025
- Business
- Al Arabiya
China approves Qatar to buy a tenth of its top asset manager
China has given approval for Qatar 's sovereign wealth fund to acquire a stake of 10 percent in its second-largest mutual fund company, the first such investment in the sector by a major Middle East investor at a time of rising tension with the West. China's securities watchdog approved the Qatar Investment Authority (QIA) to become a stakeholder in China Asset Management Co (ChinaAMC), an official filing by the China Securities Regulatory Commission showed on Thursday. The price of the stake was not disclosed. Earlier filings by ChinaAMC's largest shareholder showed the 10 percent ownership would not be priced at less than $490 million. In April last year Reuters first reported the sovereign fund had agreed to invest in the Chinese fund house. QIA will become the third-biggest shareholder in ChinaAMC, which has assets of more than 1.8 trillion yuan ($249.98 billion),and provides mutual funds and exchange traded funds to retail and institutional investors. The deal was approved amid a flurry of activity between China and Gulf countries aiming to deepen political, economic and financial ties. ($1 = 7.2005 Chinese yuan renminbi)
