A 12b-1 Fee is a promotional fee charged by a mutual fund, particularly no-load funds, aimed at covering the fund’s marketing and distribution expenses. This fee, typically about 1%, must be disclosed to investors.
An 'Approved List' refers to a specific selection of investments that a mutual fund or other financial institution is authorized to invest in. It can be statutory, especially when fiduciary responsibilities are involved.
Asking price refers to the initial price at which an investment or property is offered for sale. It is a key term in real estate, finance, and investments, marking the starting point for negotiations.
A mutual fund program that allows shareholders to receive a fixed payment each month or each quarter. The payment comes from dividends, including short-term capital gains, and income on securities held by the fund. Long-term capital gains are distributed annually when realized.
A balanced mutual fund invests in a mixture of common stock, preferred stock, and bonds to achieve the highest possible return while maintaining a low-risk strategy.
Breaking the Buck refers to a decline in the normally constant $1 net asset value (NAV) of a money market fund. This can occur if the fund suffers severe losses or if investment income falls below operating expenses.
Capital gain distributions refer to payments made by mutual funds or corporations to their investors, representing the gains earned from the sale of securities or liquidated assets. This distribution retains its character as capital gains when passed on to investors.
Closed-End Mutual Funds are investment companies that operate with a limited number of shares outstanding. Unlike open-end mutual funds, which create new shares to meet investor demand, closed-end funds have a fixed number at inception.
Closet indexing involves structuring a mutual fund or other managed portfolio to nearly replicate an index while avoiding full disclosure and charging active management fees.
A common stock fund is a type of mutual fund that exclusively invests in common stocks of publicly traded companies. These funds aim to provide capital growth through equities.
Dollar Cost Averaging (DCA) is an investment strategy where an investor consistently buys a fixed dollar amount of an asset, such as mutual funds or securities, at regular intervals. This results in purchasing more units when prices are low, effectively lowering the average cost per share over time.
Exchange-Traded Funds (ETFs) are investment funds traded on stock exchanges, allowing for flexibility and real-time trading. They offer advantages over traditional mutual funds by being priced throughout the trading day.
An exit fee, also known as a back-end load, is a fee charged when an investor sells or withdraws from an investment, typically within a specific period.
The expense ratio is a financial metric that measures the ratio of operating expenses to gross income for real estate properties or the percentage of total investment paid by shareholders for mutual fund operating expenses and management fees.
A family of funds refers to a group of mutual funds managed by the same investment management company, each with different investment objectives and the ability to switch investments among the funds.
A niche segment within the advertising industry, focused on the promotion of financial products and services such as mutual fund shares, limited partnership units, and products offered by banks, brokerage firms, and insurance companies.
Forward pricing is a method of pricing used by open-end investment companies, where the share price is determined by the net asset value (NAV) of the outstanding shares, and all incoming buy and sell orders are based on the next NAV calculation.
A front-end load is an initial sales charge or commission incurred by an investor when buying a financial product, used to cover administration fees and agent commissions.
A fund family, also known as a family of funds, is a group of mutual funds offered by the same investment company that share similar investment objectives, management, and administrative structures.
Fund switching refers to the process of moving money from one mutual fund to another within the same fund family, often to respond to market fluctuations or changing financial needs.
Inflation-Indexed Securities are bonds or notes that guarantee a return exceeding inflation if held to maturity. These instruments include Treasury Inflation-Protected Securities (TIPS) and mutual funds owning such securities.
An intermediary acts as a go-between in various capacity including executive recruiters, brokers and financial institutions that facilitate investment decisions on behalf of others.
Investment refers to the purchase of assets such as stocks, bonds, mutual fund shares, real property, collectibles, or annuities, with the expectation of obtaining income, capital gain, or both in the future. Investment tends to be longer term and less risky than speculation.
An investment company is a financial institution engaged in holding securities and assets for investment purposes. They pool funds from individual investors and invest them in diversified portfolios of securities, offering professional management and diversification benefits.
Legislation passed by Congress requiring registration and regulation of investment companies by the Securities and Exchange Commission. The Act sets the standards by which mutual funds and other investment companies operate.
An investment objective is a financial goal that an investor aims to achieve, guiding them on the type of investment suitable for their needs. For example, an objective focused on capital growth might lead to investing in growth-oriented mutual funds or individual stocks, whereas an income-driven objective could direct investments toward income-oriented mutual funds or stocks.
Large-cap stocks, also known as big-cap stocks, are shares of companies with a large market capitalization, typically $5 billion or more.
The term 'load' can refer to different concepts in computing and finance. In computing, it involves moving a program from a disk to a computer's memory. In finance, it typically refers to a sales charge paid by an investor when buying shares in a mutual fund.
Mark to Market (MTM) is a financial accounting method where the value of an asset is adjusted to reflect its current market value rather than its book value. It's used in margin accounts to ensure compliance and by mutual funds to report daily net asset values.
Mid-Cap stocks typically have a market capitalization between $1 billion and $5 billion, positioned between small-cap and large-cap stocks. These stocks often offer a blend of stability and growth potential.
Chicago-based company best known for evaluating MUTUAL FUNDS. Morningstar rates funds from one to five stars, using a risk-adjusted performance rating in which performance equals total return of the fund.
Net asset value (NAV) represents a company's or mutual fund's per-share value, calculated by dividing the total value of assets minus total liabilities by the number of shares outstanding. It's an essential metric for investors to gauge the value of an individual share relative to its underlying assets.
Net Asset Value (NAV) is a measure used to value a mutual fund or an exchange-traded fund (ETF) and represents the market value of these investment assets minus their liabilities, typically expressed on a per-share basis.
The net asset value (NAV) represents the per-share value of a fund's assets minus its liabilities, used to measure the performance of mutual funds, ETFs, and similar investment vehicles.
Net Change refers to the difference between the closing price of a stock, bond, commodity, or mutual fund from one trading day to the next. It is a crucial metric for investors to gauge the daily performance of an asset.
An open-end management company is an investment company that sells mutual funds to the public and continually creates new shares on demand.
A type of mutual fund that primarily focuses on achieving high capital growth by investing in high-growth companies that typically pay small or no dividends.
A redemption fee is a charge imposed for the repurchase or release of an asset from creditor claims, commonly used in mutual funds and other types of investments.
A Regulated Investment Company (RIC) is a type of investment company in the United States that is eligible to pass through income to shareholders without having to pay taxes at the corporate level, provided it complies with certain regulatory requirements outlined by the Internal Revenue Code.
A sales charge is a fee paid on purchasing an investment or product, typically associated with mutual funds, to compensate brokers or financial advisors for their service.
A sales load, also referred to as a sales charge, is a commission or fee paid to a broker or agent when an investor buys or sells shares in a mutual fund.
Small-cap stocks refer to the stocks of publicly traded companies with a market capitalization typically between $300 million and $2 billion. They are considered less well-established but often exhibit faster growth potential compared to mid-cap and large-cap stocks.
Switching refers to the process of moving assets from one mutual fund to another. This movement can occur either within a family of funds or between different fund families.
Telephone switching in the context of finance refers to the process of shifting assets from one mutual fund to another via a phone call. This can take place within the various types of funds (stock, bond, money market) of a single family of funds or across different families of funds.
UCITS are a popular investment structure within the European Union that allows for a single authorization from one EU member state to market the investment product throughout the EU. UCITS are mainly mutual funds and investment trusts that adhere to strict regulatory standards to protect investors.
An investment fund that pools resources from multiple investors to purchase a diversified portfolio of securities, managed either as an actively traded or static investment portfolio.
A Voluntary Accumulation Plan is a financial strategy subscribed to by a mutual fund shareholder to accumulate shares in that fund over time. The shareholder decides both the investment amount and the investment intervals.
A systematic approach used by investors to receive fixed payments from their investment accounts or mutual funds on a regular basis, usually monthly or quarterly, often consisting of income, capital gains, or both.
