Monday, June 27, 2011

Index Mutual Funds

What is an investor to do to combat all these hidden/high fees that effect your bottom line? Well maybe look into Index Mutual Funds....its an investment vehicle to match/track the components of a market index ( such as Standard & Poor 500 Index)  So you get the wider range of exposure ( in this case 500 companies) low operating costs and smaller turnover ( certain criteria to enter this funds). The drawback with this strategy is you cannot control the amount of one company that you buy into as your purchasing the whole fund, so if ABC Company is a dominant player within the fund you are exposed to its swings in the market place. So to finish up with my opinion on this subject, i look for Equity Mutual Funds that have at least 1 Billion in total assets and pays out a dividend that i roll back into the fund ( as stated in the last blog to reduce your "real cost")  Again there are thousands of mutual funds out there, but i believe that only 10% are worth having and remember what i have stated in this past 2 blogs, look for a good fund manager that has a proving track record......this is paramount!

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