Mutual Funds

Goal

• Diversification

• Professional Money Management

• Easy

• Time and Energy Saver

• Higher returns than if you ‘do it yourself’

Structure

• Money from individuals is pooled by a fund management company (Vanguard / Fidelity).

• Fund Manager (Advisor) buys and sells stocks or bonds with the pooled funds.

• Individual investors benefit from diversification with little investment.

Key Metrics

• Net Asset Value (NAV)– A ‘per share’ measurement of the total value of

the assets held by the mutual fund

• Performance– Percentage gain in fund value over a specified

time period (annually, quarterly, etc.)

Fees

• Load (Sales fees)

• 12(b)-1 fees (marketing fees)

• Management fees

• www.morningstar.com

Taxes

• Till death do us part….

Mutual Funds Categories

• Growth• Aggressive Growth• Value• Income• Equity-Income• Bond• Asset Allocation

• Balanced• Growth and Income• Sector• Index• Conscience (Socially

Responsible

If You Can’t Beat ‘em Join ‘em

• Index funds historically out-perform actively-managed mutual funds

• Lower fees

• Lower taxes

• More sleep at night…

Tools

• Morningstar (the king)

• Matching funds to your objectives

• Portfolios constructed entirely with funds

• Diversification by buying funds that balance each other

Let’s Take a Closer Look

• www.fidelity.com

• www.janus.com