Our Guide to Mutual Funds

When it comes to mutual funds, you've got a lot of choices out there in the marketplace.  When you're evaluating mutual funds, you need to carefully consider the loads the mutual fund charges investors.  There are no-load mutual funds, front and back-loads and even expiring back-loads.  We're going to discuss all of these fund types in turn and explain why investors need to understand how these loads can eat into their investment's overall performance.

A closed-end fund, also known as a closed-end company, is one of three basic types of investment companies. A closed-end fund works like an individual stock because the fund's shares are traded on an open exchange.  Unlike open-end mutual funds, closed-end mutual funds raise money only once during an Initial Public Offering (IPO).

If you're thinking about buying mutual funds some of the terminology you'll encounter can be confusing, especially for the novice investor.   This is the first article in a four-part series on buying mutual funds.  In this first part we're going to discuss the popularity of mutual funds, their risks and some of the terminology you'll encounter.

Now that you understand some of the basics of mutual funds, we're going to start discussing how to research a mutual fund.  You're overall objective here is to find the best mutual fund possible, but what exactly does that mean?  For example, what are the financial objectives that buying a mutual fund can help me accomplish?

In the third part of this series on buying mutual funds we're going to discuss evaluating mutual funds.  There is no doubt that when it comes to publishing information on mutual funds that Morningstar is an industry leader.  Here we're going to help you to better understand the information you're likely to encounter when reviewing performance reports you see from Morningstar and other publishers of mutual fund ratings data.

In this final publication on buying mutual funds we're going to talk about two specific topics - management fees and fund loads.  We're also going to quickly talk about the information you'll be able to find about a fund manager in the fund's prospectus.

In this article we're going to discuss mutual fund rating systems.  Of course the premier fund rating system is that published by Morningstar.  But we're also going to discuss some of the problems an investor needs to be aware of when using a rating system and some of the alternatives to such systems.

Conducting mutual fund research is a lot like conducting stock research, but because mutual funds are pre-packaged portfolios of stocks, the process is a little simpler.  Since the universe of possible mutual funds is much smaller than that of common stocks, you are starting with a much smaller number of options to evaluate.

This week we are going to discuss AIM Mutual Funds.  As we've done in the past, we are going to first provide some information on the overall family of funds from AIM Investments.  Then we are going to talk a little bit about their fee structure and finish up with a listing of the top three performing mutual funds from AIM.

The next family of funds that we are going to discuss as part of our ongoing series is American Mutual Funds.  We'll first give you some background on the company itself, and then briefly discuss American's fee structure and returns.  We'll finish up by listing some of the top-rated American mutual funds.

In this review we're going to take a closer look at Federated Mutual Funds or simply Federated Funds.  When researching this family of mutual funds we couldn't help but noticed that the top performers for this company included a combination of institutional mutual funds and those targeted to the individual investor - a good mix when doing a review.

Fidelity mutual funds are up next in this series of articles covering families of mutual funds.  As promised, we are going to use the same format throughout this series so that comparisons can be made between families.  That being said, we are going to first talk about the family of mutual funds offered by Fidelity, then talk about fee structures and finally mention some of the top rated Fidelity mutual funds over the past several years.

Franklin Mutual funds bears the name and image of one of America's greatest citizens - Benjamin Franklin.  In this review, we'll see if this company lives up to the legacy he's left behind.  As we've done in the past, we're going to take some liberties with the name of this mutual fund, but we do realize the company's formal name is Franklin Templeton Investments.

This week we'll be reviewing Hartford Mutual Funds.  Hartford is a pretty well known company, especially if you're looking for life insurance.  But the insurance and investment services industry are all about managing money and that means there is a good fit for these same companies to offer investors mutual funds.

Continuing our series on mutual fund families, in this article we are going to discuss Janus Mutual Funds.  We will stick with the format of this series by first commenting on the overall family of funds offered.  Next we will talk about the fee structure of Janus, then finish up with a listing of some of the top rated Janus Mutual Funds.

We've already talked about the mutual funds that are available from Van Kampen and their relationship to Morgan Stanley.  Here we're going to focus strictly on Morgan Stanley mutual funds, how they are offered, and how they are performing.

According to Forbes magazine, Oakmark Mutual Funds had some of the best performing mutual funds in 2005.  Oakmark's stated philosophy is to invest in value - that' something we like to hear.  In terms of size, Oakmark is perhaps the smallest family of mutual funds reviewed to day, with an offering of only seven funds.

Next up in this series is Oppenheimer Funds mutual funds.  Just in case you're wondering if we've done our homework - yes we do know that the real name is one word - OppenheimerFunds.  But to make things easy we're going to use the two terms interchangeably when describing the performance of this family of mutual funds.

Unlike some of the other mutual funds we've reviewed, PIMCO Mutual Funds is focused on serving the institutional money manager.  You'll notice that later on when we discuss minimum investments.  That does not mean that individuals shouldn't be interested in PIMCO funds because they should be - the returns on some of their funds are quite high.

We're going to continue with our reviews of mutual fund families with Pioneer Mutual Funds.  Here we're going to provide a brief background of the company itself, including the services Pioneer offers to investors.  We'll also provide you with some information on the performance of their mutual funds.

Putnam Investments has a heritage that dates back to the 1830's.  Now that's quite a history, even relative to other mutual fund giants we've reviewed.  Putnam mutual funds seem to reflect the balance you would expect with such a long history; with a good mix of stock and bond funds.

Next up on our list of mutual fund reviews is Rydex Mutual Funds.  Rydex used to be geared more towards the serious investor since their minimum investment for any fund was a hefty $25,000 (it is now $2,500).  It's also a relatively small player in the mutual fund space, with only a little under $16 billion in assets under management.

Next up on our list of mutual fund families is Van Kampen mutual funds.  Our review will include a brief background of the company and the services Van Kampen provides its clients.  We will also include a review of the top performing funds you'll find at Van Kampen.

Vanguard Mutual Funds was our first in a series of articles covering families of mutual funds.  We used the same format throughout the series so that you can make some comparisons between these various families.  We start by talking briefly about the overall structure of Vanguard, provide you with a feel for their fee structure and finish up with an overview of some of their top rated mutual funds.

Commodity mutual funds are an interesting, and potentially rewarding, way to diversify your investment portfolio beyond stocks and bonds.  That's because commodities are often viewed as a hedge against inflation.  Meaning the prices of commodities tend to rise in step with inflation.  This movement trends to run counter to stock prices - which is an attribute that makes commodity mutual funds so attractive to many investors.

Gold mutual funds is just one of several ways that individuals can invest in gold that we discussed in our article - appropriately named - Investing in Gold.  In that article we talked about eight different ways to buy gold, and gold mutual funds are an excellent choice if you considering entering the market.

One way the average investor can start to invest in the real estate market is via real estate mutual funds.   That's because many of these specialized mutual funds allow investors to gain entry into this market with as little as $2,500.  Real estate funds also offer the investor all the advantages of a typical mutual fund such as lower overall risk and professional portfolio management.

You've probably done a lot of reading about index funds that make them sound so simple - buy an index fund and forget about it.  After all an index fund is, by its very nature, a well diversified portfolio of stocks.

An exchange traded funds, or EFT, might best be described as a hybrid between a share of common stock and a mutual fund.  In fact, because of the way EFTs are structured, they present some interesting options to both the novice and seasoned investor.

Today, money market mutual funds account for nearly 1,000 of the more than 8,000 mutual funds available to the market.  Even more impressive is the fact that money market funds assets account for more than one-quarter of all mutual fund assets. That's around $2 trillion invested in money market funds alone.

The stock market is simply an amazing organization when it comes to creativity.  Take hedge funds for example, they're not exactly mutual funds and they're not exchange traded funds either - so what exactly is a hedge fund?

I was invited to appear on a live CNNfn television show to discuss my article "How to evaluate Load vs. No Load Mutual Funds."  As the producer and I were working out the logistics of my appearance, she mentioned in passing that "most people can't afford an investment advisor."

You'd have had to be living on a desert island with no TV, newspaper or internet connection to have missed hearing about the great mutual fund scandal of 2003.The issue was that some mutual fund companies allowed certain hedge funds to engage in after-hours trading, sometimes incorrectly referred to as market timing. Unfortunately, some companies have used the confusion about the term "market timing" to further their own cause. How?

The perfect Mutual Fund you build should have the objective of owning no more than 12 to 15 companies; owning shares in 12 companies would allow the diversity needed to sleep well at night and would provide a cash dividend every week of the year. The 12 companies (with staggered dividend payout dates) in your perfect Mutual Fund should not only provide a cash dividend every week of the year, each company should also have a historical record of raising their dividend every year for at least the past 8 years (to eliminate risk).

How many times has this happened to you? You're at a social function and the conversation turns to investing. Pretty soon, people are comparing how well their investments are doing. As you might imagine, being an investment advisor this happens to me a lot. However, I recently had an experience with it that startled me.

Market index funds like Vanguard's famous S&P500 fund and the SPY "Spyder" on the AMEX caught on in the late 90's, right when the long bull market turned into a crazy bubble with a blow off top in 2000.  There are very good reasons to use index funds - low expenses, the failure of most active managers to beat the indexes consistently and the statistical trend that says stocks return an average of 11% per annum over long periods of time.

The recent bear market should have opened the eyes of investors, making them realize that you can't possibly think someone else, such as a financial advisor or broker can care more about your financial situation than you do. Now that investors have lost in some cases over 80% of their retirement accounts, all that these so called "advisors" can do is put their hands up in the air and say I was wrong. That is simply not good enough for clients who have trusted that professional for 10, 15 or 20 years. I know people that literally had to put retirement plans on hold and go back to work because they can't financially support themselves after these losses.

Here are some facts that might make many fund investors question why they have chosen to invest in funds at all.  According to John Bogle, former CEO of Vanguard Funds, one of the most trusted authorities on investing in mutual funds and a strong advocate for ordinary investors, such investors typically get poor returns on their investments. How poor?

With the internet such a huge part of our daily lives, many investors have access to a wide range of instant investment information.  Whether you're into stocks, bonds, mutual funds, futures or options, there are tons of electronic investment newsletters offering to turn your small stake into a giant fortune. All you need to do is subscribe and watch your portfolio soar.

Indexing is an investment approach that seeks to match the investment returns of a stock or bond index. An investment manager tries to duplicate the target index by holding all the securities in the index. This is what is called a passive management approach which emphasizes broad diversification and low portfolio turnover.

‘Sector funds are too risky.' ‘I doubled my money with Fidelity Select Technology in 12 months!' ‘Avoid sector funds.' If all of this sounds confusing, you are not alone. Sector funds are among the more misused and misunderstood investments. So, how should you use sector funds?

With the stock market stubbornly refusing to settle down and smooth out, Wall Street has been scrambling to come up with "product" they can sell to gun shy investors. One such new concept is the Lifestyle fund; an extremely diversified package designed to be the single fund in an investor's portfolio.