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Mutual Funds and Hedge Funds

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									Mutual Funds and Hedge
         Funds
        Industry Research
          Fund Industry
What Mutual Fund is?

   A mutual fund is a company that
    combines, or pools, investors'
    money and purchases stocks or
    bonds.
   provide advantages for investors
    that include diversification,
    expert stock and bond selection,
    low costs, and convenience.
The Mechanics

   Investors become part-owners
    of the fund itself, and thereby
    the assets of the fund.
   The fund invests its assets by
    buying stocks, bonds, or a
    combination of such securities.
   These stocks or bonds are often
    referred to as holdings, and all
    of a fund's holdings taken
    together are its portfolio.
The Benefits

   The advantages of mutual funds are
    diversification, professional
    management and convenience.
   funds offer lower costs by virtue of
    their size; they may receive breaks
    on trading costs, and they certainly
    spread many internal costs over a
    large shareholder base, allowing for
    economies of scale
The Benefit (continue)

   They don't demand large up-
    front investments.
   They're easy to buy and sell.
   They're professionally managed.
Types of Mutual Funds

   Stock Funds
   Bond/Income Funds
   Global/International Funds
   Money Market Funds
   Index Funds
Stock Funds

   Stock funds are a diversified
    portfolio.
   The investment objective of this
    class of funds is long-term
    capital growth with some income.
   There are many different types
    of equity funds
Bond/Income Funds

   The purpose of Bond/Income Funds
    is to provide current income on a
    steady basis.
   When referring to mutual funds, the
    terms "fixed-income," "bond," and
    "income" are synonymous.
   These terms denote funds that invest
    primarily in government and
    corporate debt.
Global/International Funds

   An international fund (or foreign fund)
    invests only outside home country.

   Global funds invest anywhere
    around the world, including home
    country.

   It tend be more volatile and have
    unique country or political risks
Money Market Funds

   The money market consists of
    short-term debt instruments,
    mostly T-bills.
   This is a safe place to keep
    money. A typical return is twice
    the amount would earn in a
    regular savings account
   a little less than the average
    certificate of deposit (CD).
Index Funds

   This type of mutual fund
    replicates the performance of a
    broad market index such as the
    S&P 500 or DJIA.
   An index fund merely replicates
    the market return and benefits
    investors in the form of low fees.
Example of Mutual Funds

   Fidelity Blue Chip Value Fund
   Invest in securities of well-
    known, established companies.
   The Fund will seek out
    companies that are undervalued
    relative to other companies in
    the large-capitalization category
    within the U.S. market.
Example of Mutual Funds
(continue)
   Schroder MidCap Value Fund
   The Fund normally invests at
    least 65% of its assets in equity
    securities of mid-cap companies.
   Invests in a variety of equity
    securities, including common
    and preferred stocks, and
    warrants.
What Hedge Fund is?

   A hedge fund is a fund that can
    take both long and short
    positions, buy and sell
    undervalued securities.
   trade options or bonds, and
    invest in almost any opportunity
    in any market where it foresees
    impressive gains at reduced risk.
The Mechanics

   A Hedge Fund is a pool of capital for
    leveraging an investment portfolio
    that uses a private partnership as its
    structural format.
   This structural format is made up of
    a General Partner (investment
    manager), and Limited Partners
    (investors).
The Mechanics (Continue)

   The investment manager receives a
    fee for managing the fund, but only if
    it is productive.
   The investment Manager may use
    any investment strategy or style he
    chooses, no matter how risky or
    "volatile", to manage the fund's
    assets for greater return.
The Benefits

   Many hedge fund strategies have the
    ability to generate positive returns in
    both rising and falling equity and
    bond markets.
   Hedge funds have higher returns
    and lower overall risk.
   Flexible in their investment options
    because it can use financial
    instruments beyond the reach of
    mutual funds
The End

								
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