Learn about the different types of mutual funds, what they cost, how they work, how they’re taxed, and more.
When are mutual fund orders executed?
Mutual fund orders are executed once a day, at 4 p.m. Eastern Time, and are typically posted by 6 p.m.Learn More: When Are Mutual Fund Orders Executed?
How much money do I need to be able to invest in a mutual fund?
Some funds have no minimum investment at all, though most set between $500 and $5,000 as the entry-level amount.
How are capital gains in mutual funds taxed in the U.S.?
That depends on the fund type: stock funds are taxed at the capital gains rate, bond funds are taxed differently (some are tax-exempt), and international funds may depend on the issuing country’s tax rate and whether the U.S. has a tax treaty with that country.
How is mutual fund pricing determined?
Funds generally set the price of transacting units according to the fund’s net asset value (NAV), the total value of its assets minus all of its liabilities.Learn More: How Mutual Fund Pricing Is Determined
Can someone ever invest in too many mutual funds?
Yes, they can. Investors need to avoid funds with overlapping holdings, make sure their funds meet their investment goals, and watch the fees.Learn More: Too Many Mutual Funds?
How can I tell if a mutual fund’s fees are too high?
That depends on the type of fund and whether it is actively or passively managed. Quant funds usually charge less than those doing fundamental analysis; small-cap and international funds usually cost more. Within categories, compare similar funds and look at Morningstar’s average figures for fund types.Learn More: What Constitutes a ‘High Fee’ for a Mutual Fund?
Growth and Income Fund
A growth and income fund is a mutual fund or ETF strategy that combines using the capital gains potential of the growth segment and the dividend income and stability of the value segment.
A feeder fund is one of many smaller investment funds that pool investor money, which is then aggregated under a single centralized master fund, allowing for reduced operation and trading costs.
An abnormal return deviates from an investment’s expected return and can help investors determine risk-adjusted performance or measure the effect of events such as lawsuits or buyouts.
The cornerstone of many investor portfolios, "Spider" refers to Standard & Poor's Depository Receipts, or SPDR, which is an exchange-traded fund that tracks its underlying index, the S&P 500.
Aggressive Growth Fund
Aggressive growth funds invest in companies that have high growth potential, including newer companies and those in hot sectors of the economy.They are actively managed to achieve above-average returns when markets are rising, but are more volatile and may underperform in down markets.
Class C Share
Class-C mutual fund shares charge a level sales load set as a fixed percentage assessed each year. This is different from front-load shares that charge investors at purchase or back-end loads that charge at time of sale. Class-C shares work best for investors planning to hold them for three years or less.
Life-cycle funds are asset-allocation funds in which the share of each asset class is automatically adjusted to lower risk as the desired retirement date approaches. They are also known as age-based funds and target-date funds.