1. Your Questions About Mutual Funds Definition
Maria asks…
What exactly is the definition of a blue chip stock?
How would I know a blue chip stock if I were to look for one? I have looked at the holding of
mutual funds with blue chip in their names and I have my serious doubt that many of the
companies in those portfolios are in fact blue chip. Is Amazon for example a blue chip?
Steve Winston answers:
Blue chip is an overused term these days. As for mutual funds, many use the term without
regard to what their funds actually contain. NO, Amazon is not a blue chip stock. Maybe in 20
years it might be but prior to 5 years ago it did not even make a profit.
I have give some thought to what should be considered a blue chip stock and I did actually find
a few. 1. It must pay a dividend and it must raise the dividend at least 5 times out of the
previous 10. 2. It must have a conservative capital structure of no more than 33% long term
debt to equity. The earning record must be consistent and increasing with no more than 3 down
years in the last 10. Its sales must also be increasing.
I have published a list of what I consider blue chips on my blog.
Http://munciebirder.blogspot.com/
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2. Donna asks…
what is mutual fund and need how to do project on it.?
hi guys ....i need simple definition for mutual fund,and explain what is it ??
Thanx for answering me
Steve Winston answers:
A mutual fund is a pool of money from numerous investors who wish to save or make money
just like you. Investing in a mutual fund can be a lot easier than buying and selling individual
stocks and bonds on your own. Investors can sell their shares when they want.
Each fund's investments are chosen and monitored by qualified professionals who use this
money to create a portfolio. That portfolio could consist of stocks, bonds, money market
instruments or a combination of those.
By investing in mutual funds, you could diversify your portfolio across a large number of
securities so as to minimise risk. By spreading your money over numerous securities, which is
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3. what a mutual fund does, you need not worry about the fluctuation of the individual securities in
the fund's portfolio.
People have different investment needs depending on their financial goals, tolerance for risk
and time frame—when they need the money they invested.
Mutual funds are created with these needs in mind-we start with you. Before you choose
investments, think about your financial goals, risk tolerance and time frame. Then choose
investments that match them.
Http://mutual-funds-personalfin.blogspot.in/2012/05/how-does-sip-work-in-mutual-fund.html
Lizzie asks…
Mutual funds lexicon?
"Shareholders are investors that hold shares in the company. Investors are the investing public
of which some own shares in the company."
I got this definition from wiki answers. I am trying to understand the actual definitions of the
shareholder and the investor because it seems like they become are the samething.
I am understanding it like this: a shareholder is a person who owns shares in a company and he
is investing his money. The investor is the person who just invests his money but he is not a
shareholder yet. Am I understanding this correctly?
Thanks for your answers. I appreciate it.
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4. Steve Winston answers:
Your definition is fine except I would change "is not a shareholder yet" to "may not be a
shareholder yet"
Jenny asks…
What do we mean by fund management company? pls suggest?
i am in a confusion that what is the difference between fund management comapany and Asset
management company.?
what does an asset management company do in case of mutual funds?
In mutual fund who ll be responsible for the allocation of units and its redumption to & from
public?
caz i got a definition that mutual fund units were issued & handled by fund management
comapany.
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5. thanks in advance.
Steve Winston answers:
It's OK to be confused because "fund manager" is a vague term that gets used all over the
place.
Fidelity might be called a fund manager. A fund usually will deal with 2 other entities. A
distributor and an adviser. These might also be called fun management companies. The
distributor will mhave a securities license and receive deposits for customers, make payments
for redemptions, answer the phones, run the web site and mail the statements. An adviser will
be registered with the SEC as an investment adviser. He will make all the buy and sell decisions
for the fund's assets. These advisers are frequently called asset management companies.
Fidelity creates a fund and stacks the board of directors with it's own executives and their
friends. The board hires Fidelity's distribution subsidiary to be the fund's distributor and
contracts with Fidelity's asset management subsidiary to be the adviser.
Vanguard may manage the index funds in a similar manner, but hires outside asset managers
to be the funds' advisers for non-index products.
Nancy asks…
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6. what are mutual funds?
give full definition with examples.merits and demerits
Steve Winston answers:
A mutual fund is simply a financial intermediary that allows a group of investors to pool their
money together with a predetermined investment objective. The mutual fund will have a fund
manager who is responsible for investing the pooled money into specific securities (usually
stocks or bonds). When you invest in a mutual fund, you are buying shares (or portions) of the
mutual fund and become a shareholder of the fund.
Mutual funds are one of the best investments ever created because they are very cost efficient
and very easy to invest in (you don't have to figure out which stocks or bonds to buy).
By pooling money together in a mutual fund, investors can purchase stocks or bonds with much
lower trading costs than if they tried to do it on their own. But the biggest advantage to mutual
funds is diversification.
Disadvantages: Mutual funds are like many other investments without a guaranteed return.
There is always the possibility that the value of your mutual fund will depreciate. Unlike
fixed-income products, such as bonds and Treasury bills, mutual funds experience price
fluctuations along with the stocks that make up the fund. When deciding on a particular fund to
buy, you need to research the risks involved - just because a professional manager is looking
after the fund, that doesn't mean the performance will be stellar.
Another important thing to know is that mutual funds are not guaranteed by the U.S.
Government, so in the case of dissolution, you won't get anything back. This is especially
important for investors in money market funds. Unlike a bank deposit, a mutual fund will not be
FDIC insured.
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7. Donald asks…
What is a mutual fund?
Can someone provide me with a simple definition of a mutual fund without looking on the
internet?
Steve Winston answers:
A mutual fund is operated by an investment company which raises money from shareholders
and invests in a group of assets (usually stocks or bonds, following a stated set of objectives.
Mutual funds sell shares of the fund to investors, much like any other type of company can sell
stock in itself to the public. Mutual funds then take the money from investors and use it to
purchase stocks, bonds and money market instruments. In return for the money they give to the
fund when purchasing shares, shareholders receive an equity position in the fund.
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