New answers tagged mutual-funds
0
When shares of an mutual fund are traded, most days end with a net difference, which the mutual fund manager has to follow by buying / selling the underlying shares. Each sale will result in some capital gains; and in average, about every second day is a ‘sell’ day.
For ETFs, the daily trading happens between buyers and sellers in the open market; the fund ...
1
Q1. Does change in NAV due to above reasons is also one of the ways
fund unit holders earn?
Yes, when the interest rates fall, the price of the old bonds with higher coupon goes up.
Q2. Does interest earned on underlying bonds reflect on NAV? If yes,
then how? If not, then how the interest on underlying bonds is paid
back to fund customers/unitholders?
...
0
The RBI VRRR is a variable reverse repo rate scheme.
By increasing VRRR, the RBI can force the banks to sell low yield debt and deposit excess cash with RBI.
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A coupon rate is not what you get when you purchase bonds in secondary markets. That was the yield on the face value of the bond, which was probably issued many years ago when interest rates were higher.
Talking about India specifically, most government-backed entities currently issue bonds with a coupon rate of 4-5%, which is actually lower than returns you ...
5
It is a mix of different factors.
The typical ETF tracks an index while most mutual funds are actively managed. A high turnover rate will generate lots of taxable events
The creation-redemption-process is an exchange of assets and tax advantaged
Changes to the index are often not made by buying and selling the underlying stock but by heartbeat trades which ...
-2
Based on mhoran_psprep's answer and Caleth's comment, here's a timelime of what happened, using fictitious dates:
Date
Event
2021-11-01
As a result of a Vanguard policy change, corporate retirement plans between 5M USD and 100M USD got out of the standard target funds and into the institutional equivalents.
2021-11-10
Vanguard sell the underlying asset ...
1
Both dividends and capital gains are referred to as distributions in that context.
https://www.investopedia.com/terms/d/distribution.asp:
A distribution generally refers to the disbursement of assets from a fund, account, or individual security to an investor. Mutual fund distributions consist of net capital gains made from the profitable sale of portfolio ...
5
You need to quote from the document.
At the end of 2020, Vanguard reduced the minimum investment in its
institutional Target Retirement funds to $5 million from $100 million.
That set off an elephant stampede, as multimillion-dollar corporate
retirement plans got out of the standard target funds and into the
institutional equivalents. (Clients have to sell ...
-1
I tend to agree with the OP's assertion. Six years ago I started an experiment to test indexed funds versus managed funds.
Here are the data, where fees are "Gross Expense Ratio" and returns are labeled "Average Annual Total Return" by my provider and are since inception:
The format is fund name and description, type of fund, return, fees,...
2
It's fine to invest in funds that have a high expense ratio if they have demonstrated higher returns, and except for the past year, this one has.
But the return of the fund is not the main reason that it's helpful to invest in it. It helps diversify your portfolio, since it's a global fund focused on one sector versus a US-based broad equity inced (S&P ...
0
No, it's underrated
The fund will charge you always, no matter how they perform. Even if they make losses, they will charge their fee anyway. This is why bank wants you to buy funds so hard. They effectively tax your assets.
'Overperforming' an index doesn't mean much either. This is because if you look only on the index, you miss the dividends. If you ...
5
The problem here is that you're thinking of it as 1%.
However, lets figure you're making 8% on your investment. 1% is 12.5% of that. The high-fee fund has to be 12.5% better just to keep even. Oops, got too simple with the percentages. The low-fee fund gives you 7.7% while the high-fee fund gives 6.7%. The high-fee fund has to be 15% better to match the ...
12
There are two problematic assumptions in your post:
You assume that funds with higher fees have higher returns. And even more, you assume that their higher returns are exceeding the fees. In such a case it would indeed be foolish to look at costs. However, the evidence for persistence of skill in investing is pretty weak and mostly applies to niche markets. ...
14
The problem you have is picking the fund that can overcome the higher fees to beat the low cost index fund. You have to know which funds will over the next 10 years beat the index by enough to overcome the higher fees.
If the only way to know is to look back, then you are likely to have picked wrong.
Also make sure that you are looking at all the fees. Some ...
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