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| A mutual fund is an investment company that pools the savings of individuals and institutional investors who share a common financial goal. These investors buy shares of the mutual fund and become shareholders of the fund they chose. The mutual fund has specific investment objectives and strategies. Investors buy and sell shares of the fund based on the prevailing Net Asset Value Per Share (NAVPS). |
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| »» PROFESSIONAL MANAGEMENT |
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»» DIVERSIFICATION |
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Investors avail of the active professional fund management from full time investment experts. They are backed up by research teams focusing on seizing market opportunities. |
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The pooled fund enables it to spread it in various securities resulting to greater propensity to earn more and spreads the risks across the different securities. |
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| »» LIQUIDITY |
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»» SAFETY |
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Mutual fund shares are redeemable shares. The fund readily buys back shares to be redeemed based on the current NAVPS. Moreover, fund’s portfolio consists of liquid assets mostly marketable securities. |
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The industry is highly regulated by the Securities and Exchange Commission (SEC). Moreover, securities are kept with a custodian bank separate from the management company. The shareholder records are with the transfer agent. An external auditor oversees financial issues. |
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| »» TAX FREE |
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Earnings from mutual funds are excluded from items classified as taxable income. This is a provision of the Comprehensive Tax Reform Package (CTRP) of 1998. |
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