Jump to navigation Jump to search A mutual fund is a professionally managed investment fund that pools money from many investors to purchase securities. Mutual funds have advantages and disadvantages compared to direct investing in individual securities. The primary advantages of mutual funds are that they provide economies of scale, a higher level of diversification, they provide liquidity, and they are managed by professional investors. On the negative side, investors in a mutual fund must pay various fees and expenses. Primary structures of mutual funds include open-end how To Invest In Mutual Funds 2015, unit investment trusts, and closed-end funds.
Mutual funds were introduced to the United States in the 1890s. In the United States, closed-end funds remained more popular than open-end funds throughout the 1920s. After the Wall Street Crash of 1929, the U. Congress passed a series of acts regulating the securities markets in general and mutual funds in particular. The Securities Act of 1933 requires that all investments sold to the public, including mutual funds, be registered with the SEC and that they provide prospective investors with a prospectus that discloses essential facts about the investment. The Securities and Exchange Act of 1934 requires that issuers of securities, including mutual funds, report regularly to their investors. This act also created the Securities and Exchange Commission, which is the principal regulator of mutual funds.
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The Revenue Act of 1936 established guidelines for the taxation of mutual funds. The Investment Company Act of 1940 established rules specifically governing mutual funds. 1950s, when confidence in the stock market returned. The introduction of money market funds in the high interest rate environment of the late 1970s boosted industry growth dramatically. Among the new distribution channels were retirement plans. In 2003, the mutual fund industry was involved in a scandal involving unequal treatment of fund shareholders.
Some fund management companies allowed favored investors to engage in late trading, which is illegal, or market timing, which is a practice prohibited by fund policy. 4 trillion, according to the Investment Company Institute. In the United States, mutual funds play an important role in U. Luxembourg and Ireland are the primary jurisdictions for the registration of UCITS funds. These funds may be sold throughout the European Union and in other countries that have adopted mutual recognition regimes. Increased diversification: A fund diversifies holding many securities.
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Class I are usually subject to very high minimum investment requirements and are, end funds hire portfolio managers to supervise the fund’s investments. Failures have been increasing recently. Professional investment management: Open, investment approach and permitted investments. The primary advantages of mutual funds are that they provide economies of scale — according to the Investment Company Institute. Bond how To Invest In Mutual Funds 2015 fixed income funds, the Board must ensure that the fund is managed in the interests of the fund’s investors.