Frequently Asked Questions: Mutual Funds
What is a Mutual Fund?
A mutual fund is an investment company which raises money from shareholders and invests it in stocks, bonds, government securities, options, futures, currencies, or money market securities. These funds offer investors the advantage of diversification because investors in the mutual fund receive shares of the entire pool of assets. All shareholders share equally in the gains and losses generated by the fund. The fund's assets are managed by professionals who may employ a certain strategy to achieve results.
What is the difference between a closed-end and an open-end fund?
A closed-end fund is a fund which has a fixed number of shares outstanding. Its shares trade similar to stocks and are listed on a stock exchange. An open-end fund sells and redeems shares at any time, directly to shareholders and the number of such shares is not fixed. In addition, open-end funds can only be purchased or sold once per day (at the net asset value as computed after the market closes) provided you submitted your trade instructions prior to the particular fund's cut-off time.
What is the commission Vision charges for buying Mutual Funds?
Vision charges $25 per trade for the purchase of no-load mutual funds, but Vision does not charge per trade for load funds.
A mutual fund had great returns last year, is it going to receive the same returns this year?
How well the fund does depends on the performance of the assets it holds. If the assets of the fund do well, the fund will also do well. As with any investment, the mutual fund's previous year's performance is not a guarantee of future returns. Please be sure to carefully read the prospectus of any fund before making an investment. The prospectus contains complete information including all charges and expenses.
How do I choose the right mutual fund for me?
Fund managers employ a variety of different strategies. Some try to achieve aggressive growth, while others try to generate income for their shareholders, and yet others maintain a well-balanced portfolio by investing in several different financial instruments. Choosing a fund depends on your investment objectives, goals and risk tolerance; however, there are so many funds to choose from that you will be able to find one that fits your investment needs. Vision's Fund Screener is a good place to start looking at different funds based on your criteria. Please be sure to carefully read the prospectus of any fund before making an investment. The prospectus contains complete information including all charges and expenses.
What is a prospectus?
A prospectus is a formal written document issued by the mutual fund company and includes its history, the background of its managers, the fund's objectives, a financial statement, and other essential data. It must be provided to all shareholders of open-end funds and newly-issued closed-end funds. Please be sure to carefully read the prospectus of any fund before making an investment. The prospectus contains complete information including all charges and expenses.
Why do mutual fund orders need to be submitted prior to 3:00 PM ET in order to be processed that day?
Each mutual fund family establishes its own specific cut-off time for accepting orders though they mostly fall in the range of 3:30 PM – 4:00 PM ET. Therefore, Vision requires a slightly earlier time to enable us sufficient time to process the orders and submit them to the respective fund family.
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