23 terms

Investments - Mutual Funds


Terms in this set (...)

mutual fund
fund that pools the savings of many individuals and invests this money in a variety of stocks, bonds, and other financial assets, and is managed by a professional
capital gains
The positive difference between the purchase price of a stock and its sale price.
Spreading out investments to reduce risk
dollar cost averaging
investing the same amount of money on a regular basis regardless of market conditions
the ease with which an asset can be converted into cash
equity funds
Invest primarily in stocks
fixed income funds
invests primarily in corporate and government debt
balanced funds
invest in a combination of stocks and bonds
money market funds
Mutual funds that invest in short-term, low-risk securities
Index funds
mutual funds that attempt to mirror the movements of an existing stock index
specialty funds
focus on a group of companies sharing a particular characteristic
socially responsible funds
make investment choices based on criteria related to corporate social responsibility
12b-1 fees
annual fees charged by a mutual fund to pay for marketing and distribution costs
load fund
a mutual fund for which you pay a commission every time you buy or sell shares
front-end load
Fees paid to the mutual fund company as an entry requirement into certain mutual funds.
back-end load
Fees paid to the mutual fund company when selling a mutual fund.
Net Asset Value (NAV)
The current market value of the securities contained in the mutual fund's portfolio minus the mutual fund's liabilities divided by the number of shares outstanding
Open-End Funds (Mutual Funds)
Continually issues new shares
Closed-end funds
fund turnover rate
number of times securities in a fund portfolio are replaced or traded during an accounting period (higher number, means higher trading/commission costs, lowers fund's total return)
Expense Ratio
the amount that investors pay for all of a mutual fund's management fees and operating costs -generally a low expense ratio is better than a high ratio
document issued to possible buyers of a stocks and bonds outlining the financial condition of the company issuing those securities
benchmark index
An index that correlates with a fund, used to measure a fund manager's performance.