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The relevance of Mutual Funds & their development over time - Literature review Example

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A mutual fund is a kind of an investment fund that is professionally managed and pools funds from several investors so as to buy securities such as bonds and stocks. In addition a mutual fund can be viewed as a firm that pools a group of individuals together and invests their…
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The relevance of Mutual Funds & their development over time
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Download file to see previous pages Whereas no legal definition exists for the phrase “mutual fund”, it is regularly used to refer only to those combined vehicles mostly under regulation and that the general public can buy. Mutual funds are at times known as “registered investment companies” or “registered companies”. It is important to note that hedge funds cannot be called mutual funds since they primarily cannot be bought by public (Bogle, 2010).
Open-ended funds-these are funds that are accessible for subscription and therefore can be redeemed on a constant basis. These types of mutual funds are usually accessible for subscription all through the year and hence investors can trade the units at NAV correlated prices. Open-ended funds lack a fixed or a definite maturity date and one of the key aspects of them is liquidity.
Close-ended funds on the other hand are funds that have a defined or definite maturity period such as 3 to 6 years. Close-ended funds are thus open for subscription for a particular period at the point of first launch. Normally, these funds are usually listed on a renowned stock exchange (Northcott, 2009).
Interval funds-these funds merge the aspects of close-ended and open-ended funds. Interval funds can be traded on stock exchanges and are usually open for redemption or sale at preset intervals on the existing NAV. The following are types of funds that are on the basis of investment objectives. These include;
Equity/growth funds-these funds invest a main part of their corpus in stocks and represent the biggest class of mutual funds. Nevertheless, there are numerous kinds of equity funds since there are several various kinds of equities. Equity funds can be categorized on the basis of either the size of the firms invested in or the manager’s investment style. They can be classified as value, growth and blend. Value in this case may ...Download file to see next pagesRead More
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