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Fundamentals of fund management

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  1. What is a fund management?
  2. Why choose funds?
  3. The context of investing
  4. Types of funds
    1. Stock funds
    2. Growth funds
    3. Growth income, equity income, and balanced funds
    4. Specialty and other types of funds
    5. Bond funds
    6. Corporate bond funds
    7. High yield bond funds
    8. Municipal bond funds
  5. Fund manager
  6. Equity
  7. Cap
    1. Small Cap
    2. Large Cap
    3. Mid-Cap fund
  8. Bibliography

The easiest way to harness your savings to the stock market is through investing in a fund which pools your money with that of many thousands of other people. Investment funds are commercially run organizations, often owned by banks or insurance companies, which buy shares in bulk, collect the dividends on your behalf and keep track of your slice of ownership.

There are hundreds of different types, most using expensive City professionals to choose shares to buy and sell. Some called 'trackers' use a computer to mimic a particular index or benchmark such as the FTSE100 index of leading UK shares.

They do this by holding the same numbers of each share as the index they are tracking. Trackers are mostly the cheapest form of fund investment.
At one level, funds make investing simple. You do not have to even think about the complexities of investing, reading annual reports or understanding the jargon of companies and profits. That is the fund manager's job. Likewise, you are automatically protected against significant damage from bankruptcy or collapse of an individual firm, because every fund spreads its money over a fairly large number of different investments.

[...] Types of funds Stock funds Value funds Value fund managers look for stocks that they think are cheap on the basis of earnings power (which means they often have low price/earnings ratios) or the value of their underlying assets (which means they often have relatively low price/book ratios). Large cap value managers typically look for big battered behemoths whose shares are selling at discounted prices. Often these managers have to hang on for a long time before their picks pan out. [...]


[...] Likewise, you are automatically protected against significant damage from bankruptcy or collapse of an individual firm, because every fund spreads its money over a fairly large number of different investments. However, that does not mean that all funds are equal. There is a huge difference in what they set out to achieve, and some large differences in the way they are structured. Most funds fall into two types: Open-ended investments companies (which are what used to be known as unit trusts), and investment trusts. [...]


[...] Mid-Cap Fund Mid-cap fund is a type of stock fund that invests in middle-sized companies. A company's size is determined by its market capitalization, with mid-sized firms ranging from billion to $10 billion in market cap. Most stocks held in this fund are firms with established businesses, but are still considered developing companies. These funds tend to offer more growth than large-cap stocks, and less volatility than the small-cap segment, The size restrictions for a mid-cap stock fluctuate between funds. [...]

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