Mutual funds are so popular nowadays that there are actually more mutual funds available than there are stocks of individual companies. Below we present some of the most popular questions about mutual funds along with some short answers to the questions.

Top Mutual Fund Questions Of 2008 – What Is The History Of Mutual Funds?

Mutual funds actually go all the way back to the Netherlands in the early 1800s. Mutual funds were then called an investment trust (which most still are today). Mutual funds came to America in 1889 with the New York Stock Trust. Many mutual funds in America were started in Boston, which was a financial center of some renown back in the 1800s.

Top Mutual Fund Questions Of 2008 – What Is An IRA?

In 1975, a provision was added to the Internal Revenue Code that allowed individuals already in a corporate pension fund to contribute up to $2,000 per year to a Individual Retirement Account. This was by far and away the largest contributing factor contributing to the growth of mutual funds over the last 33 years.

What Does No Load Mutual Fund Mean?

This type of fund is offered by an open-ended investment company that imposes no sales charge (load) on its shareholders. Investors buy shares in no-load funds directly from the fund companies, rather than through a broker, as is done in load funds.

What Makes a Mutual Fund?

A mutual fund is a group of stocks or bonds that are bought together – individual investors buy shares in the fund instead of the individual securities. You become a shareholder of the mutual fund instead of the individual stocks when you buy shares of a mutual fund.

What Is An Index Fund?

This type of fund tracks one of the stock market indexes, whether it is the Standard & Poor’s 500 Stock Index, the entire stock market index, or some other performance measure of a like group of stocks.

What Is Net Asset Value?

For most of the funds, the NAV is determined daily, after the close of trading on some specified financial exchange, but some funds update their NAV multiple times during the trading day. Net Asset Value (NAV) is the value of a share in a mutual fund and is calculated by dividing the total value of the fund, less the fund’s liabilities, by the number of shares currently issued and outstanding.

Top Mutual Fund Questions Of 2008 – What Is A Public Offering Price?

Open-end funds sell shares at the POP and redeem shares at the NAV, and so process orders only after the NAV is determined. Closed-end funds may trade at a higher or lower price than their NAV; this is known as a premium or discount, respectively. If a fund is divided into multiple classes of shares, each class will typically have its own NAV, reflecting differences in fees and expenses paid by different classes. A Public Offering Price (POP) is nothing more than the net asset value plus a sales commission.