What factors are important in selecting a mutual fund select all the correct answers? (2024)

What factors are important in selecting a mutual fund select all the correct answers?

Investing involves more than just concentrating on returns. Various factors come into play, such as the fund house's sustained performance, its investment strategy, its approach to investing, and the rate of portfolio turnover aligned with economic cycles.

What factors are important in selecting a mutual fund choose all correct answers?

Investing involves more than just concentrating on returns. Various factors come into play, such as the fund house's sustained performance, its investment strategy, its approach to investing, and the rate of portfolio turnover aligned with economic cycles.

What are three factors you should consider when buying a mutual fund?

Which is an important theme in selecting a mutual fund?

Volatility, or variation in performance: The volatility in returns of the fund should be in sync with its objectives; for instance, if the fund is a high-risk-high potential return fund, then volatility is a given; however, if it is a low-risk fund, the returns should not be volatile.

What are the 4 types of mutual funds?

Why do we select mutual funds?

There are several specific reasons investors turn to mutual funds instead of managing their own portfolio directly. The primary reasons why an individual may choose to buy mutual funds instead of individual stocks are diversification, convenience, and lower costs.

What is the most important factor in a mutual funds performance?

1. Performance of the Securities in the Fund Portfolio. A mutual fund invests in a basket of securities (stocks and bonds) depending on the fund's asset allocation and investment objective. Since the fund invests in specific securities, the fund's performance is based on how well these securities do.

What is the main characteristic of a mutual fund?

A mutual fund is a company that pools money from many investors and invests the money in securities such as stocks, bonds, and short-term debt. The combined holdings of the mutual fund are known as its portfolio.

What are the factors to consider when selecting an investment?

What is critical for selection of mutual funds?

Before choosing a mutual fund, the investor should analyze the risk associated with the investment. And he/she has to check if the risk is comfortable. Equity mutual fund investments are subject to market fluctuations. Therefore, an equity-oriented portfolio could witness volatility as well in the short term.

What are the four most important elements to look at when evaluating a mutual fund?

List and analyse the four elements of mutual fund selection: people, philosophy, process, and performance. What is the difference between a compound rate of return and a simple rate of return? A simple rate of return is the return earned by the mutual fund over a given period.

How do I choose a fund?

Which of the following best defines a mutual fund?

Answer & Explanation. Option D. It is an institution that sells shares to the public and uses the proceeds to buy a selection of various types of stocks and bonds. Mutual funds collect money from the public investor and use it to buy other securities, usually stocks and bonds.

Which mutual fund is best?

What should be the ideal mutual fund portfolio?

Usually, their portfolio will contain 3-4 large-cap fund, another 3-4 mid-cap funds, few random debt funds, and perhaps a hybrid fund tucked in. This is a classic example of a messy, directionless, and a pointless portfolio. Ideally, you need to have non-overlapping mutual funds to avoid redundancy.

What are the 3 main groups of mutual funds?

The structural classification – open-ended funds, close-ended funds, and interval funds – is quite broad, and the differentiation primarily depends on the flexibility to purchase and sell the individual mutual fund units.

What are the three general types of mutual funds?

The three general types of mutual funds include money market funds, bond funds, and stock funds. The three general types of mutual funds include money market funds, bond funds, and stock funds.

What are the three different types of mutual funds?

What is the risk of mutual funds?

The securities held in a mutual fund may lose value either due to market conditions or to the performance of a specific security, such as the stock of a company if the company performs poorly.

What is the main advantage of investing in mutual funds?

Diversification: Mutual funds invest in a variety of securities, which helps reduce or mitigate the risk. This diversification helps protect the investor's portfolio from market volatility. Liquidity: Mutual funds are highly liquid investments, which means that investors can easily buy and sell their units at any time.

Are mutual funds better?

All investments carry some risk, but mutual funds are typically considered a safer investment than purchasing individual stocks. Since they hold many company stocks within one investment, they offer more diversification than owning one or two individual stocks.

What are the pros and cons of mutual funds?

One selling point is that they allow you to hold a variety of assets in a single fund. They also have the potential for higher-than-average returns. However, some mutual funds have steep fees and initial buy-ins. Your financial situation and investment style will determine if they're right for you.

What to check before investing in mutual funds?

What two factors are the most important to consider before making an investment?

1. The returns that an investor is expecting to receive by making investment in the respective security or assets. 2. Another variable that is considered by the investor is the risk of uncertainty that depicts the deviation in the expected return occurring due to various factors of the market.

What are the 5 investment considerations?