| Mutual Fund Expenses | There are five main components of mutual fund expenses: (1) management fees, (2) legal fees, (3) administrative costs, and (4) marketing fees. |
| Growth Funds Definition & Investment Strategies | Growth funds consist of stocks which pay little or no dividend but provide an above average annual return to investors. These stocks within the funds are considered growth stocks because the money made annually is directly reinvested into research and development for new products and services. |
| Value Fund Definition & Investment Strategies | Value funds are investment vehicles comprised of undervalued stocks which pay high dividends. Value funds are often a place investors flight to during an economic downturn. Value funds saw a large increase in investment dollars as a result of the 2008 credit crisis. |
| Index Funds Definition & Investment Strategy | Index funds mimic the movement of the index in which it follows. The index can follow the respective market by using two methods: (1) buying every stock in the index and weighting it appropriately, and (2) buy a select group of stocks which best represent the sector. |
| Annual Turnover - Measure of Mutual Fund's Transactions | Annual turnover is a term used when describing the amount of securities removed from a mutual funds holdings during a 12-month period. Tracking a funds annual turnover is a good measure of the funds ability to stick with a long-term trading approach. |
| Appraisal Ratio Formula & Example | The appraisal ratio is a financial measure of how a fund manager is fairing against a relevant benchmark. |
| Custodian Bank Functions | A custodian bank acts as a third party watchdog responsible for protecting the investor's assets from any illegal activities of the fund manager. Custodians banks were setup under the Investment Company Act of 1940 which was passed by Congress to protect investors. |
| Transfer Agent Definition & Functions | The transfer agent is a company responsible for maintaining the back office operations for a mutual fund. At times a mutual fund will elect to have their custodian bank provide this service, but there are companies that specialize in the functions of the transfer agent. |
| Mutual Fund Distributors | A mutual fund distributor is an entity responsible for marketing and selling the shares of a mutual fund company. These mutual fund distributors are also known as underwriters for the fund. |
| Aggressive Growth Mutual Funds Strategies and Downside Risks | Aggressive growth mutual funds are the speculative side of the mutual fund family. Unlike value funds which are publicized as being conservative and long-term in their scope, aggressive growth funds are the "make money" now option. |
| Fund of Funds - Strategies and Fees | A fund of funds is a mutual fund which invests in a group of funds instead of picking specific stocks. These funds of funds have a great appeal to investors, because it gives the perception of greater diversification. |
| Sector Funds Definition & Risks | Sector funds are mutual funds which specialize in investing in a few sectors within the market. This allows an investor to focus in on one or two sectors for investing. |
| Fund Manager's Letter Definition | The fund manager's letter is a letter generally sent out annually to shareholders of a mutual fund. This letter provides details about the stocks currently held in the fund and how the current market activity has affected the performance of the fund. |
