When you get a mutual fund, what do you get with it? What kinds of stocks are in a mutual fund?

Question

Any ideas?

Answer 1

it depends on the type of fund, you can buy funds to a section of the market or ones that only green compnays or support your polictics. but any of the funds will show a breakdown of what the fund consists of.

Answer 2

Here's an article I wrote a little while ago explaining how a Mutual fund works....it's like a gift basket....every one is a little different depending on what you want....

Mutual funds are a good "starter" investment for people to learn the ropes on, but what was that guy telling me about MERs and DSCs and why do I need to diversify again?

The financial industry is packed full of technical jargon and acronyms, so hopefully this will help explain the basics of one of the financial products that will help give you a diversified portfolio without all the technical knowledge and work.

WHAT'S A MUTUAL FUND?

Normal People Talk: You buy a gift for someone and they like it, you're set, if they don't like it then you're a loser. What do you do? Instead of just buyng one thing, you put your money into a little bit of everything and go with the gift basket. Not everything in a basket might be winner, but there’s a good chance that there’s enough stuff in there that it will do more good than bad. And the best part is, someone else does all the work of putting the gift basket together. That’s all they do for a living, so they know the right mix of stuff to put in it. It might cost you a buck or $2 more to buy the basket instead of making one yourself, but it saves you a ton of time and work. You could choose something that has nothing but say maybe just candles in it or nothing but different types of meats, or you can get a gift basket with a little bit of everything, like cheese a bottle of wine, some crackers, a couple glasses, some candles. With a gift basket there's gotta be something in there that the person likes right? If the gift basket doesn't turn out to be what you thought it was and want to return it to the store you might have to pay a restocking fee.

Financial Guy Translation: You by one stock in Wal-Mart. The stock goes up, you make money, stock goes down you lose money. Simple concept. With a mutual fund you take your money and pool it together with everyone elses investment money. A Fund Manager takes the money and buys a few shares in Wal-Mart, a few shares in Coca-Cola, a few shares in Petro-Canada, a few shares in Sun Life Financial, a few shares in Sony. If Wal-mart and Coke lose a little money, but Petro-Canada, SLF and Sony go up a bunch, your investment still might make money. The Fund Comapany takes a small fee for managing the fund called the Management Expense Ratio (MER), then pays out the return from there. You can get differnt types of mutual funds that focus on different markets. For example you could get a mutual fund that only focuses on the Oil industry or only focuses on Saskatchewan companies or you buy a mutual fund that has a mix like mentioned above. With a mutual fund you are spreading your risk by diversifying your investments. If you withdraw the funds earlier than the specified time you would keep it there you may have to pay a Deferred Sales Charge or other fee.

DISCLAIMER: This example is in no way an endorsement for these companies or their stocks, nor should it be taken as advice to buy or not buy the stocks mentioned. These companies were only used as examples since they are household names. Also, gift baskets may not always be the best gift idea either and may be different in other countries...I'm talking about ones in Canada. : ) Consult a proffessional for advice is recommended with any purchase.

Answer 3

Many different kinds.  It all depends on the specific fund.  There are also mutual funds that invest solely in bonds, REITs, etc.