Zurich, Switzerland (PressExposure) May 01, 2011 -- Mutual funds are a popular investment vehicle because their diverse nature lends to a more balanced financial portfolio. Investment companies sell shares of the fund and invest the proceeds in a variety of assets under the direction of a professional money manager.
Dynamic Wealth Management, Zurich Switzerland is an independent investment advisory firm which focuses on global equities and options markets. Our analytical tools, screening techniques, rigorous research methods and committed staff provide solid information to help our clients make the best possible investment decisions. All views, comments, statements and opinions are of the authors. For more information go to http://www.dynamicwmanagement.com
Where to Buy Mutual Funds
Advisers must be registered to sell mutual funds. Licensing requirements include the successful completion of a training course and the examination required by the local regulatory agency.
Mutual funds may be purchased from registered advisers at
Credit unions/caisses populaires
Life insurance brokers and agents
Mutual fund companies
Mutual fund dealers
Mutual fund and life insurance companies typically sell only their own funds, while banks and dealers offer a variety of different products.
How to Buy Mutual Funds
There are several important steps to buying mutual funds. First, work with an adviser to create a financial plan and determine how much can be invested in mutual funds. Investigate several mutual fund options that fall within the amount available for investment. Consider:
the amount required to buy into the fund
the desired length of time to invest
associated fees (see below)
current and past fund performance, rather than future projections
the types of investments held within the fund: stocks, bonds, etc., and the level of risk involved
After completing the application form, keep a photocopy for future reference. Watch the mail for a prospectus, which provides information about the company managing the fund. Read and save all mutual fund statements, asking for clarification when required.
Buying Mutual Funds: No Load Funds vs. Front Load or Back End
The fees associated with mutual fund investment are a source of confusion for many new investors. Some mutual funds require an upfront payment to buy into the fund, although this has become increasingly unpopular. Many companies now use a back end load fee, or contingent deferred sales load (CDSL) fee; when the investor needs to sell the fund, a penalty applies based on the length of ownership. Others still offer no load funds. Do not confuse no load funds with no fees; all mutual funds include a fee called the Management Expense Ratio (MER) to cover administrative costs, the mutual fund manager's salary, legal fees, and other incidental expenses.