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Archive for August, 2011
Index Mutual Funds- Ensuring Stability Of A Specific Financial Market
Mutual funds come in a number of different categories, which all vary according to the rates of return, risk factor involved as well as the period of time they take to mature. An index mutual fund is a category of investment that seeks to ensure stability of a specific financial market, regardless of the prevailing market condition, be they good or bad. They do so by tracking the indices of the securities in a particular investment.
To ease the tracking movement, there is a software that one can make use of. The software requires little human input and hence, there is minimal interference with the records. This means that index mutual funds therefore require no form of active management and can do well in passive management. This directly translates to lower management fees and lower taxes as well.
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Hedge Fund Vs Mutual Fund, Understanding The Differences
In 1949 Australian Alfred Jones was credited with the term “hedge fund”. Historically it derives its name from the use of hedging to manage risk while achieving superior returns. Today, a hedge fund is an un-regulated investment vehicle designated for sophisticated, also known as the “Accredited Investor”.
Mutual funds gained popularity in the 1980′s. Prior to this time, the problem of the small investor was in obtaining sufficient knowledge to make informed investment decisions, and so the average person avoided stock market investing. Instead money was held in traditional savings accounts or placed with a bank in a Guaranteed Investment Certificate (“GIC”) or Certificate of Deposit (“CD”).
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