Mutual Funds Families
If you decide to invest in mutual funds, be sure to obtain as much information about the fund before you invest. And don’t make assumptions about the soundness of the fund based solely on its past performance or its name. Investors can obtain next documents: Past Performance (advertisements, rankings, and ratings often emphasize how well a fund has performed in the past. But studies show that the future is often different), Looking Beyond a Fund's Name (Don't assume that a fund called the «XYZ Stock Fund» invests only in stocks or that the «Martian High-Yield Fund» invests only in the securities of companies headquartered on the planet Mars), Bank Products versus Mutual Funds (many banks now sell mutual funds, some of which carry the bank's name.) Read without fail about basis of Mutual Funds
 Mutual funds may be classified into types, according to organization, fees charged, methods of trading funds, and investment objectives. Two general types of mutual funds: open-end funds and closed-end funds. Most mutual funds fall into one of three main categories — money market funds, bond funds (also called «fixed income» funds), and stock funds (also called «equity» funds). Each type has different features and different risks and rewards. Generally, the higher the potential return, the higher the risk of loss.
See more on Different Types of Mutual Funds
Many mutual funds offer more than one class of shares. Each class will invest in the same «pool» (or investment portfolio) of securities and will have the same investment objectives and policies. But each class will have different shareholder services and/or distribution arrangements with different fees and expenses. As a result, each class will likely have different performance results. More about
the ABCs classes.
 Mutual funds are a cheaper way to get the investing job done. Research and operating costs are shared by the thousands of shareholders. The most efficiently run funds have an expense ratio (the percentage of fund assets deducted for management and operating expenses) of less than 1% a year. Mutual funds are convenient. They can be purchased (and sold) directly from a mutual fund company by mail and by telephone and from full-service brokers, financial planners, banks or insurance companies. And other advantages, plus disadvantages you find in article - Advantages and Disadvantages of Mutual Funds
 Historically, compliance requirements for investment management companies have been driven by regulations. Events during the past few years related to late trading, market timing and selective portfolio disclosure, however, have resulted in growing concern among the investor community and regulatory agencies on the robustness of compliance programs in place at mutual fund companies. By devising and implementing policies and methodologies, and by effectively leveraging technology, mutual fund companies can reduce the risk of failing to comply with regulatory requirements, with the additional benefit of increasing investor confidence. Following are seven key compliance imperatives that will have a major impact on the mutual fund industry over the next year and suggestions on how firms can meet the challenges posed by the requirements successfully. Read about
duties of mutual funds
 Now that you are familiar with the various types of mutual funds, here are some specific guidelines for picking them. Step 1 — Identify the types of funds you need (e. g., growth) to reach your goals. Step 2 — Do more reading. Step 3 — Do some research on specific funds. Step 4 — Determine your selection criteria and eliminate funds. Read about this and next steps in article Selecting a Mutual Fund.
Picking a mutual fund from among the thousands offered is not easy. There are some common pitfalls. May be you want selecting One or More Mutual Funds? There are some advices for you.
 Risk varies from one fund to another. You can measure risk by how often the fund's value changes and how big the changes tend to be. This is called volatility. The bigger and more often the changes in value, the more volatile the fund. Every fund has a different degree of volatility, which depends largely on what the fund invests in. A general rule in investing is that the higher the risk, the higher the potential for gains (and losses), and the lower the risk, the lower the potential for gains (and losses). The key to reducing the overall volatility of your portfolio is to hold a wide variety of investments. When you're deciding which funds to invest in, you need to ask yourself how comfortable you'll be with volatility. Not all risks apply to all funds.
 What does it cost to invest? Before investing, you should always find out what type of sales charge the fund uses to compensate the broker or sales representative who assisted in the purchase of the mutual fund. As with any business, running a mutual fund involves costs — including shareholder transaction costs, investment advisory fees, and marketing and distribution expenses. Funds pass along these costs to investors by imposing fees and expenses. It is important that you understand these charges because they lower your returns. Some funds impose "shareholder fees" directly on investors whenever they buy or sell shares. In addition, every fund has regular, recurring, fund-wide "operating expenses". Funds typically pay their operating expenses out of fund assets — which means that investors indirectly pay these costs. SEC rules require funds to disclose both shareholder fees and operating expenses in a "fee table" near the front of a fund's prospectus.
 SEC - is a United States government agency having primary responsibility for enforcing the federal securities laws and regulating the securities industry/stock market. The SEC was established by the United States Congress in 1934 as an independent, non-partisan, quasi-judicial regulatory agency following years of depression caused by the Great Crash of 1929. The main reason for the creation of the SEC was to regulate the stock market and prevent corporate abuses relating to the offering and sale of securities and corporate reporting. The SEC was given the power to license and regulate stock exchanges. Currently, the SEC is responsible for administering seven major laws that govern the securities industry. They are: the Securities Act of 1933, the Securities Exchange Act of 1934, the Public Utility Holding Company Act of 1935, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940 and, most recently, the Sarbanes-Oxley Act of 2002.
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