Know About Hedge Funds

By: Julian Rogers Smith

Investment in the share market is an activity that requires great discretion! Unpredictability is the name of the game. People try their best to get the information to invest properly but most of the time they do not get the right answer.

Predicting the ups and downs of the market is a tough task and not many can do it successfully. If you are a newcomer in this field, the best bet for you, is to consult a financial adviser. These people are the experts in the domain of investment and they can guide you to eventual profit.

One of the primary mistakes that most investors in the share market do is to put money in one big firm and ignore the other small names. Remember if the big company fails your whole investment would be wasted. It is very difficult to realize the objectives and day-to-day working of the big organization. If you are a minor shareholder then you are at the fringe and have no inside information.

Big companies do fail, and quite frequently. In such a scenario, you are in for a big trouble. The solution again is to be in touch with a good financial advisor who would advise you regarding the health of the company and the other probable companies where you can invest. Try to buy shares of at least twenty different companies, including both small and medium size companies. This will ensure that even if one or two companies or industries go down you have a few others to bank on.

An investment specialist or a financial adviser can influence and educate you to choose these companies. Most people also invest in stocks at a wrong time. They tend to invest when there is a surge in the stock price and tend to sell when it slows down. A financial specialist can help you correct the mistakes and understand the market better.

Another major mistake is not to reinvest your money after you make a profit. Most investors keep their money as liquid and lose all hopes of making greater profit. This definitely is not a correct strategy and the financial expert can help you form a proper strategy.

The experts can be hired according to your needs. You can pay them downright and enjoy their detailed information and advice or you can pay when you make profit. Hundreds of people ware benefited in this process. If you are hoping to make a mark in the share market, try out the financial experts first.

Tips On Choosing The Right Forex Broker

By: forexpros

To trade forex you need to open an account with a forex broker. The global nature of forex markets means that you have a wide choice of forex brokers to choose from, right across the world.

The forex trading business runs differently to equity broking, where trades are made through a clearing house and stock exchange and where money is made from fees for every trade, often referred to as the “brokerage”.

The Spread

Forex brokers make their money from the difference between their quotes of the ask price, the price their customer buys at, and the bid price, the price their customer sell at. This is called the spread and is measured in “points” or “PIPs”, the smallest measurement for a change in the price of a forex. For example, a one “point” or “PIP” change in the USD is 0.0001X the USD amount. Naturally, a wider spread results in more revenue for the broking firm.

Forex Brokers Reputation & Capital Backing

To choose the right forex broker, you should start with considering its reputation and what trading services it offers. Doing your research thoroughly will take time, but as with trading itself, will save and make you money in the future. There is a wealth of information on-line and in magazines. It is important to be sure of the credibility of your information sources. Internet forums used by other forex traders can be very helpful in cutting through the claims of each company. By listening to people, forums and magazines that you trust, you can build a list of quality firms to choose form.

It is important to be aware of unscrupulous firms as well as those operating in countries where regulations are weak. The USA, UK, Hong Kong & Australia are example of countries with very strong regulatory environments.

In the USA, a forex broker is required to have a minimum of 20 million dollars, to ensure the protection of their client’s funds. To find out the capital backing of US broking firms, go to www.cftc.gov/marketreports/financialdataforfcms/index.htm. A large firm with a high capitalization ,with hundreds of staff, is more likely to be able to protect your funds in a time of crisis and provide you with services such as 24hr phone support.

Trading Accounts

Depending on how much you have to invest and how much you intend to invest in each trade, you will get an account with a minimum equity requirement. This is the amount of funds you must have in the account in order to trade. A reputable forex broker will generally recommend that you trade 1-5% of your total capital in any trade. For example, an account with a minimum trade of $1000 dollars could have a minimum capital requirement of $34,000.

Leverage

Many forex traders increase their potential for profit by engaging in leverage. This is where they borrow from their forex broker to increase the amount they’re trading. This method of trading also exposes a trader to a higher potential loss. Brokers may offer leverage of 100 to 1 or 250 to 1, where you can borrow up to 100 or 250 dollars for every dollar you deposit with the forex broker.

Trading Tools

Some forex brokers include valuable trading tools with some of their accounts that would otherwise cost you to subscribe to. These include real time data from the markets, charting tools and access to industry leading financial media, commentary and analysis.

Avoiding Scams

Unfortunately, there will always be a minority of unethical brokers trying to scam their customers.

A bucket shop does not always enter trades into the general market by finding an opposing position. Instead, they take the opposing position, relying on the fact that most forex traders lose. Not only do they get the spread, they also keep their clients losing trade. Because that trade exists only on their internal systems, they can distort the market by widening in the spread. In a country with poor regulations, brokers could simply prevent trades from getting closed, to ensure that they don’t lose.

Most trading platforms will allow you to put in “stops”; when a currency hits a pre-determined price, your trade is sold out. This is a helpful tool to minimize losses. However, an unscrupulous broker can see your stop and move the price to that point, sell out your trade, make a quick profit and then return the price to the previous position.

To avoid this and other pitfalls, do your research, make sure your broker is credible and get the account and trading platform that suits your needs.

Choosing Penny Stocking Brokers For Life

By: Terry Detty

You are going to find yourself involved in many different types of investing as you enter into the world of trading. In hiring and finding a good and decent broker to help with your support questions in your investments, you want to find a broker that you really connect with and who can handle your investments with great care, like it was their own.

Usually the very best way to do this is by spending a lot of time reading message boards or visiting chat rooms researching what other normal people just like yourself are saying about their experiences as a newbie in the industry. Finding others online that share the same qualities that you do is always an important find. It is sometimes a wise choice to pay a monthly fee to be a part of a team of other chatters, this keeps all of the riff raff out. This way you can concentrate on good plays of the day.

Brokerage houses have brokers that work for them who in turn have the ability to buy and sell stocks on the stock exchange. You may be asking yourself, do I really need a broker? The simple and short answer is, yes you do. If you plan on buying or selling stocks on the stock exchange, it makes a lot of sense to have a broker to assist you with that.

Stockbrokers all have to take and pass a couple of different test in order to possess the ability to get a license in order to be able to trade and broker on the stock exchange. If your not fully prepared to take these tests, you may fail. Its been said that they are very difficult to pass. A majority of stockbrokers and similar people have backgrounds in finance or business related type trades. Many times, they possess a Bachelors or Masters degree in these hard to understand fields.

Brokers and stock market analysts are not the same exact thing. It is the job of a stock market analyst to analyze many stocks and come up with reason that the stocks are moving up or down and why that might be. What the analyst figures out from that research is then filtered and sent along to the stockbroker who then executes trades on the stock exchange as to what the analyst has come up with.

The idea here is that with many different people like this working together as a team, they can come up with sound bets that will make everybody money in the short and long terms. Communication between these many different departments and businesses and exchanges can become very complex in a hurry if someone is not there to see that it all continues to flow along without interruption.

The way that brokers earn their money from the work that they do buying and selling, is from commissions and sales most of the time. It is in their best interest to earn money for you because that is how they are going to get paid as well. Another way brokers can earn money is simply by earning a fee every time you trade online. This is known as a transaction and a fee is attached to it for the involvement that they had in making these things happen for you the way that you have asked.

There are two different types of brokers that you will run across as you invest. The first is known as a full service broker. This type of broker provides you with service that can almost take care of all sorts of hand holding help that you might need. They can give you investment advice based on what they have learned and what they speculate will happen in the future. This type is usually paid in commissions.

The second type of broker is known as a discount broker. Basically, this type of brokerage account would not offer all of the amenities that the full service broker would offer. You will not receive any investment advice. They will not perform any research for you if needed. This is just fine in many cases for many people. Not everyone likes full service, in that case you can choose discount service.

Depending again on the research that you come up with while browsing the internet for others that are willing to share with you what they did and why they did it, you should be able to make an informed decision based upon that. Different options for different people.

About The Author:

Terry Detty recommends you look at the Short Selling Profit Success stories and the Pennystocking Trading Profit Tips.

Don't chase the best funds

By: cdup

Don't chase the best funds

If you ask a seasoned mutual fund investor what the three biggest keys to successful investing are, he or she is bound to say discipline, discipline and discipline. What does that mean, exactly? It means avoiding the temptation to react with the news.

A common behaviour by many new investors is that when they hear on the news that a particular stock or mutual fund is poised to explode, they run to their computers or cell phones and switch over every penny in investments that they have to this new hot stock. While this practice can work some of the time, if it worked all of the time without fail, investing would be a lot easier and everyone would be doing it.

Discipline is the practice of sticking with your advised investment plan, even if a more tempting offer comes along. When you first start to invest, you should have a good idea of your risk profile, your short and long term goals and the amount of money you're able to invest. You should pick a fund that meets all of those criteria and then settle in for the long haul. The only way to make a lot of money with mutual funds is to trust that they will give you the returns you desire, and stick with it.

There are times, however, when sticking with a fund may not be a good idea. If your fund is haemorrhaging money and has been for months, you may want to switch to a more stable mutual fund. But you can't switch over your money with every bump and swerve in the market. Not only will fees and taxes eat your principle up, you'll have no long term plan to help you invest and meet your goals.

The two biggest demons you have to deal with are fear and greed. Both of which are valid human emotions, but both can get in the way of logical, disciplined mutual fund investing. If you can manage both your greed and your fear, you can stay away from the lemming-over-the-cliff mentality that grips so many other investors. Mutual fund investing is one case where you do want to stay the course.

Temptation is a scary thing in all aspects of life. The temptation to run to the smoking hot and fashionable mutual fund of the week is extremely high, so high in fact that many investors take it like a month to a flame. If you don't want to get burned, avoid the investment tips from your friends and use discipline as your number one investment strategy.

Are You Wondering How to Start Investing in a Stock Market?

By: Adam Hefner

Are you wondering how to start investing in a stock market? Well if so this article will help you understand how a stock market works. If you understand how a stock market is run then you can increase your financial status. In fact our economy and business corporations depend on the stock market to be successful.

The first step to take to get yourself acquainted with the stock market is to understand it. Research the topic online or at your local library to familiarize yourself with the terms and how it is run. Looking at the stocks on your television of in the newspaper is another great way to learn and understand how they work.

After you familiarize yourself with the stock market then you can develop goals and techniques for yourself. If the concept of goal making or determining which stock to go with is hard for you to decide, then ask a professional stock broker for assistance.

Developing a strategy is a key when beginning to look at the stock market. Once you developed a game plan, go ahead and look at the specific stocks you might be interested in. Company reports as well as annual and quarterly reports are sources that will help you see how individual stocks are doing. There are also online resources for you to check at your own convenience.

After looking over the individual reports, you can begin investigating. It is very important for investors to realize that they should not put in more money than they can afford. Invest in companies that you know and are in your general location so that you can have more experience with their practices and procedures.

Investing in a wide variety of stocks is the best way to ensure security against a fallen stock. If you are still unsure of good stocks to invest in, then contact a professional organization that specializes in mutual funds. They will help you find which stocks are doing well or poorly.

Another thing to consider is the amount of time you can hold the stock. If you pick a good secure stock then you should be able to keep that stock for a number of years. Remember that stocks fluctuate so do not sell a stock right away because it is starting to fall on a bad day.

You should now understand how to start investing in a stock market. Looking at stock details and researching the market are good to do before investing money. Always be aware of the professionals who are available to help you at anytime if you have questions to be answered.

Sector Trading - Does Trading Sector Funds Beat the Market?

By: John Ruppel

One main attraction to index investing is that you know that your portfolio performance will not be much worse than the major averages. Of course a disadvantage to index investing is that you know you will not beat the averages either.

Most papers and financial magazines have a the year end ranking of mutual funds and ETFs, and you will find that almost always some narrow sector fund like energy or tech stocks leads the gains for the year.

With that as background, let's review the relative success of sector and country funds over the last several years. We will look at the Fidelity mutual fund family, primarily because they have a large offering of funds (over 100 equity funds alone, including domestic sectors and international funds, including country funds) and these funds have a longer trading history than many of the ETFs that can be used today for sector trading.

We can see that even for 2002 (a bear market by any definition), we saw the overall market down by better than 20%, yet there were three Fidelity funds that had a positive return for the year. And of course for the stronger market years like 2003 and 2004, there were many funds that had much bigger gains than the overall market.

Looking at the numbers, from 1999 through 2005, the three best performing Fidelity mutual funds each outperformed the broad market by at least 30 percent each year. Of course, the worst performing funds underperformed the overall market by at least 10 percent each year as well. So sector trading can be a double edged sword as well.

These numbers demonstrate the great profit potential from sector trading, but also highlight the risks associated with trading without a system to get you into the strong sector funds at the right time while getting you out before it's too late. Some type of disciplined approach is clearly needed.

Previously we described a simple trading system that uses Fidelity Select funds for a sector trading system. This system, which trades once a month, had historically returned over 16% a year. This demonstrates that a simple sector trading system that anyone can trade can yield results better than the overall market.

But with this simple one fund system you may have above market risk. For example, this simple system had almost a 50% drawdown in the 2000-2002 bear market. But there are simple changes that can be made to build a trading system that keeps above market returns while significantly reducing the risk of sector trading.

Too Good To Be True? Evaluating An Automated Forex Trading System

By: Andrew Young

Success in automated trading is more than just picking the most profitable trading system. Many newcomers to automated forex trading simply select the most profitable trading system they can find. They are then taken by surprise when a large loss takes a chunk out of their account. Why does this happen?

Every trading system come with risks, and the larger the profit, the larger the risk. Let's take a look at the most important statistics to examime when evaluating an automated trading system.

The trading system in question should have a sufficient trade history. If the trade history has only a small number of trades, you may not be getting a full picture of the potential risks. Try to examine a large number of trades over a variety of market conditions.

You can find live trading systems with trade histories and stats at ZuluTrade and Collective2. You can also use an expert advisor backtest from a program such as MetaTrader. Be sure to use accurate history data and test on open bars only. If optimizing, be sure to test on out-of-sample data.

The first thing you'll look at when examining a trading system is the equity curve. An ideal equity curve should show a smooth linear accumulation of profit from left to right. Watch out for equity curves that have sharp peaks or valleys - this can indicate a system that takes on a lot of risk.

The most important statistic to look at is maximum drawdown. The maximum drawdown is the largest peak to valley drawdown in the system's trade history. A large max drawdown indicates a system that uses very large stops or has had several large losses in a row.

Be prepared to sustain a loss up to and even exceeding the system's maximum drawdown. If the max drawdown is too much for your account, then adjust your lot sizes and stop loss accordingly or select another trading system.

Take a look at the system's trade history. Are there a lot of small profits and a few large losses? Are trades being left open for a long time before becoming profitable?

Watch out for trading systems that have very large losses in relation to profits, and trades that sustain large drawdowns before becoming profitable. This should be obvious by looking at the equity curve and the maximum drawdown.

Another important statistic to look at is the profit factor. This is the ratio of wins to losses. A profit factor of 1 is break-even, while anything over 1.5 is good. A profitable system with a low profit factor (1.2 or less) is giving up too much of its profits to losing trades.

There are other statistics available for evaluating risk, such as the Sharpe ratio, but the information above should be readily available regardless of your method of evaluation.

By carefully examining the equity curve, maximum drawdown, profit factor and trade history for any trading system, you should be able to reasonably evaluate the risks associated with trading that system, and whether that level of risk is appropriate for you.

About The Author:

Andrew Young is an MQL programmer and forex trader who specializes in automated trading. Learn more about automated forex trading services and get valuable tips on selecting profitable trading systems.

Forex Trading Online – 5 Advantages Of The Forex Market!

By: Alex Graphicson

Many people think that making money on currency fluctuations requires special skills and education! Many people think that gaining their bread on the stock exchange you must be just on the spot or at least be located in the Wall Street!

However, the reality proves that it is far from being true!

Today anyone of us can make money on the currency fluctuations without leaving their dwelling!

All you need is learn how to trade on the Forex trading online markets and here you are!

If you start navigating for Forex tools in the Internet you will find heaps of equipment kits and e-books teaching and helping you to trade money on the Forex.

However, how to make it clear which one is really good?

Could one imagine that nowadays it would be as clear as a day to get involved in training in the field of investing and trading in the Forex trading online markets.

Many of the top-notch training materials have existed for years and have undergone considerable changes though numerous enhancements, improvements and upgrades staying up to date on the latest state-of-art earning techniques and strategies.

Is it as simple to navigate on the Forex trading online market as one may think?

First of all before getting involved into this business, you shall keep in mind that any currency exchange market is a liquid system where billions of dollars and Euros that are being traded every day!

Of course this market responds to the world's tendencies and political events as well as any other huge market with negotiations that estimated at trillions of dollars!

So, let's talk a little about Advantages of the Forex Market.

1. First of all the Forex Market does not suppose to pay any commissions!

You simply pay the spread rates there!

2. Secondly, one cannot help from mentioning short selling. There is no restriction on short selling there!

3. The third advantage is that it is active 24 hours a day from Monday till Saturday evening.

4. The liquidity of the market is the fourth advantage of the Forex trading online market that means serious brokerage firms and investment banks are less likely to influence the market.

5. And finally there is no fixed lot size there, that gives you a great opportunity and space for manoeuvring!

Of course the Forex trading online market is not a sand-box where everyone can play and you shall always keep in mind that this is a serious and risky business enterprise however, if you don't spare your time and efforts for proper education, new financial boundaries will extend before you!

Mutual Fund Disadvantages

By: Bernz Jayma P.

If you're new to stock market investing you may have heard that mutual funds would be a good way for you to get started. That's actually good advice, but mutual funds have their own pitfalls to watch out for. Here are some of the things you need to know about the disadvantages of mutual fund investing.

First, many people are under the impression that mutual funds have a lower risk than investing directly in stocks because they are managed by professional fund managers. That's not necessarily true, because the fund's performance will ultimately be determined by the experience and expertise of the fund manager. So if the fund manager is good at her job, the fund will do well. If the fund manager is inexperienced or just lacks talent, the fund could perform poorly.

That means you still need to perform your own due diligence on the fund itself, and on its manager. And you'll still need to monitor the fund’s performance over time. It won't be something you can purchase and then ignore, and still expected to prosper.

Next, you will still have to take responsibility for diversifying your portfolio. You can do this by choosing a fund that purchases stocks in a wide variety of sectors, and is widely diversified across the market. Or you can invest in more than one fund if each fund specializes in a particular sector. But you will still have to become knowledgeable about investing in the stock market at some point, in order to make good choices about diversification. Otherwise you run the risk of over-diversifying and canceling out your profit, or under-diversifying and losing the risk-reducing characteristics that mutual funds can provide.

Another disadvantage of mutual funds is the cost of the management fees. Typically, there will be fees assessed each time you buy and sell shares. In addition, there are usually yearly management fees to offset the cost of the built in stock market research and the fund manager's salary.

And there's one more disadvantage that most people don't think about. Mutual funds are usually marketed as being more liquid than owning individual stocks. Generally, it's easier and faster to draw cash out of a mutual fund than it is to trade a stock. But that liquidity comes at a cost to the yield of your investment. In order for the fund to have the liquid cash available for quick and easy withdrawals, the cash cannot be invested in additional stocks (and earning money). So the cash liquidity of the mutual fund comes at the opportunity cost of investing in more stocks.

Despite these drawbacks, mutual funds may be a good investment for you. Just be sure to investigate the issues listed in this article in order to make an informed decision.

About The Author:

Author and entrepreneur Bernz Jayma P. is the owner of a financial blog dedicated to helping people expand their knowledge on personal finance. You may visit his blog at www.Invesmint.com

A Unique Investment Strategy For Mutual Fund Investors

By: brain strom

Hedge funds are becoming very popular in the news with the guru’s clamoring for increased regulation and the chicken littles sounding the market crash alarm. Hedge funds are private investment organizations that uses a different strategies protecting wealth from risks of volatile markets. It uses an unconventional investments to makeup losses when the market turns sour. They generally have a very different investment policies as compared to any mutual fund. Hedge funds tend to be more philosophical as compared to mutual funds which may cite growth or income. Capital growth and capital preservation are indeed goals of hedge fund investors.

Hedge fund managers are given much control over funds investments. But when we speak of any mutual fund, prospectus usually outline maximum and minimum allocations for different asset classes forbidding managers from riskier strategies such as shorting. So in a hedge fund the investments are up to the sole discretion of the manager. One might also call Hedge funds as strategy allocation as they may use a number of investment strategies to limit the fund’s exposure to any given strategy. Hedge fund managers may sell a large percentage of the fund’s securities and hold cash or other hard assets including commodities futures. The hedge fund manager would usually decide if a stock is overvalued for one reason or the other. Short selling would include selling securities that one does not own in order to buy them back at a discount so anyone with a margin account can do this. Such trading requires a healthy amount of assets to cover up just in case the security actually rise in value.

When we speak of hedge funds, short selling is always accompanied by long positions. Such strategies purchase securities that they believe would rise in value and simultaneously short selling those that are believed will fall. Such funds would either be net short or net long, depending on what direction the manager sees the market going. Using a long-short method within an asset class, an equity market neutral strategy may be used that earns returns from stock-picking within an industry or market and hedges against volatility. This strategy hedges against market risks. Sometimes an equity market neutral funds may employ a similar strategy called as market neutral arbitrage which would mean to imbalance the pricing between securities. Such arbitrage seeks out imbalances in multiple securities from the same issuer. The strategy would hedge market risks by investing in opposing positions in different asset class of the same issuer thus limiting the market risk. So in such a case even if the company does poorly, the investment may do very well. Certain risk arbitrage would also focus on companies involved in a takeover or merger. This strategy provides relatively consistent returns regardless of the market conditions. So looking at any of the above strategies one can say that hedge funds are a smart way of investments.

3 Basic Things Needs For Mutual Fund

By: Alex Bellweather

In past one decade the financial market feel major changes. Investor is now use mutual fund as major investment choice.

The reason behind investment in the mutual fund is to get the security than the stock market as well as better return on the investment. Investors are now considering the investment in mutual fund for their financial goal as well as save for their retirement. The investment in the mutual fund is very safe. Mutual funds also have some risk because it gives return on NAV and that is based on capital market trends and other investments. Although majority of the mutual funds are invested in the capital market.

You can get handsome return on investing in the best rated mutual fund rather than other conventional tools. It is essential to select the proper Mutual funds so, which have good track records. You must have to study the mutual funds and the risk associated with the mutual funds. Apart from NAV there are other factors like company investments, past returns and future prospects need to be considered before investing into the mutual funds.

There are some basic things need to remember before investing in the mutual fund.

1. Investment in the mutual fund involves risk. However it is not more risky than the capital market.

2. The past NAV and other financial results are the supportive documents to take the decision but there is not guaranteeing to the investments.

3. Sometime mutual funds NAV get lower than what you have invested. It is better you can choose the proper mutual funds to get the better investment.

Mutual fund is the beneficiary for the investor. It is essential to study the investment according to the market trends.

About The Author:

Alex Bellweather is a writer for Best Mutual Funds , the premier website to find mutual funds, best mutual funds, top mutual funds, investing in mutual funds, fidelity mutual funds, investing mutual funds, mutual funds investment and many more.

Mutual Funds Summed Up

By: Esteri Maina

Definition of mutual funds

Mutual funds can be said to be an assortment of securities resourcefully managed by the sponsoring management company or Investment Company that issues shares to investors.

This assortment is made through the trade of collecting funds from investors and pooling them for the rationale of building a range of securities according to affirmed objectives.

Who does this?

Mutual funds fit in to a gathering of monetary intermediaries known as investment companies or open-end investment companies. Other members of the group are closed-end investment companies also called closed-end funds and unit investment trusts.

Management of mutual funds

Mutual funds are commonly ordered as companies or trusts, thus have a board of directors or trustees selected by the shareholders or the owners.

Almost all aspect of their functions is apparently controlled. They employ an admin company to direct the investment for a fee, usually based on a percentage of the fund's average net assets throughout the year.

Categories of management

The management company may be an affiliate or joint organization or a self-governing service provider.

How they do it

They trade their shares to investors either directly or indirectly through other firms such as broker-dealers, financial planners, employees of insurance companies, and also banks.

Others can manage as well

Even the every day management of a fund is carried out by an outsider, which may be the running company or an independent third party.

Accountability of the managing company

The management company is accountable for deciding on an investment assortment that is steady with the goals of the fund as stated in its brochure and running the portfolio in the best interest of the shareholders.

The directors of the fund are in charge of general control of the fund; they are expected to generate measures and evaluate the performance of the management Company and employees who perform services for the fund.

Fundamental types of mutual funds

They include the money market, stock or equity, bond, and hybrid. This categorization is based on the type and the prime of life of the securities chosen for investment.

Money market funds invest in as short-term funds or securities that expire in one year or less, such as Treasury bills, commercial paper, and certificates of deposits.

Stock, bond, and hybrid funds invest in long-term funds or securities. Hybrid funds invest in a grouping of stocks, bonds, and other securities.

Mutual funds also differ in terms of their investment objectives

The main investment objectives within the stock funds include capital appreciation, total return, and world equity. There are two clusters of bond funds which consist of taxable bond funds and tax-free bond funds.

Main group in taxable bond funds are corporate bond funds, high-yield funds, world bond funds, government bond funds, and strategic income funds.

The chief tax-free bond fund categories are state municipal bond funds and national municipal bond funds.

Along with money market funds, there are also taxable money market funds and tax-exempt money market funds.

Open-end investment companies-why they are called so

Mutual funds are known as open-end investment companies because they are needed to issue shares and buy back remaining shares upon demand.

Closed-end funds, on the other hand, issue a certain number of shares but do not stand prepared to buy back their own shares from investors. Their shares are traded on the stock exchange or in the over-the-counter market.

Mutual Funds - Capitalizing On Real Estate Potential

By: George Gonigal

The real estate stocks are difficult for an average retail investor to read. Wild swings have been the order of the day. However, mutual funds that have 3-4 per cent investments in real estate stocks allow a small investor to benefit from the surges but remain protected from the troughs.

Making an informed decision is necessary for the success of your investment goals. Mutual Funds (MFs) are certainly among the most sought-after investment instruments in the market but since you have to select from dozens of mutual funds and not all funds perform well, here we demystify the world of mutual fund investing for you.

What are MFs?

MFs are the professionally managed funds that invest in the equities of various companies, including real estate, listed on the Indian stock markets. These funds are governed by the Securities and Exchange Board of India (SEBI) that safeguards rights and interests of retail investors. Any citizen of India can buy mutual fund units that are available at certain Net Asset Value (NAV) declared every day by the fund managing company.

Should you invest in MFs?

As an investor you could well think of investing in the stocks of real estate companies directly. However, in order to make successful investment, you must take a look at the kind of volatility realty stocks witness on the stock exchanges. The Realty Index clocked whopping returns of 48 per cent between Feb 7, 2007 and Feb 7, 2008, on Bombay Stock Exchange (BSE) but it's not that every investor who pumped in his money in realty companies directly into stock markets got such returns. In fact, there would be many who bought shares at the wrong time only to witness substantial erosion in the value of their investment.

Mutual funds, at the other end, are run by fund managers who have specialized knowledge over stock-market investing, and track market movements on professional basis. This way, they are well-positioned to make suitable decisions to invest and de-invest in the markets as per the circumstances. Though mutual funds do not guarantee a win-win situation all the way, investing in proven funds actually has the capacity to meet your objectives. As a matter of fact, the specialized investment management by mutual funds has evidently produced returns as high as 80 per cent a year, which a naive investor rarely achieves in the course of direct stock market trading.

Types of Mutual Fund

Selecting a mutual fund scheme mainly depends on your risk appetite, investment horizon, and future needs. Once you work out these factors, you can choose a suitable scheme for yourself.

Meanwhile, Brix Research brings you the insights on the various types of mutual funds classified on the basis of their investment strategy and time horizons.

Corpus investment Equity or Balanced - Equity funds park their corpus anywhere between 65 and 100% in equities. Balanced funds, on the other hand, maintain a fine balance between equity and fixed income securities. The latter option offers you security and the rate of return is relatively lower than the equity fund.

Growth or Dividend - Under a Growth fund, the returns generated over the capital invested keep on accumulating, and your cost per unit increases in tandem. You can redeem your mutual fund units, in case you want to book profits. Choosing the dividend option, on the flip side, entitles you to receive returns in the form of dividend that is distributed among the investors, on a periodic basis. Although it depends on the company's policy, dividends are generally distributed 2-3 times a year.

Open-ended or Close-Ended - On the basis of investment horizon, mutual funds are divided into two categories: open-ended and close-ended. Open-ended funds allow you to purchase and redeem units at any time, however, in case of close-ended funds; there is a lock-in period under which you cannot redeem your mutual fund units for a certain period of time.

Specialty or Diversified - A Diversified Fund allocates its corpus into different sectors of FMCG, Auto, Petro, Pharma etc. In the event of slowdown in one sector, the other one may be able to compensate it. This way an investor invests his entire corpus in different companies and enjoys the advantages of diversification.

Stocks Verses Mutual Funds

By: Smithveg

While some may find that idea of comparing stocks to mutual funds a little bit odd, since mutual funds are often made up of stocks, bonds, or some combination of the two, it's quite necessary to compare the two when it comes to deciding what is best for your financial outlook. Some of the more notable differences will be discussed below in order to help you decide which investment type is more suitable for your financial situation.

When it comes to investing for the everyday man or woman you really can't beat mutual funds. Stocks carry hefty fees for buying, selling, and transferring that significantly hinder any profits that would otherwise be made from the transaction. In fact, these fees often serve to deter the trading of stocks rather than encouraging it. Perversely, bug trading companies offer hefty discounts for their big spenders making the stock market trading game seem even more exclusive by marking it easier for those who already have a great deal invested that they make it for the new guy trying to make his way on the market. Mutual funds are much more accessible to those who don't have massive fortunes available to invest and need to make small steps (such as $100 a month) towards their financial and investment goals.

Mutual funds typically carry less risk than the average stock purchase as well. This happens for many reasons. First of all mutual funds are not generally invested in one sector, industry, or company. For this reason if one of the stocks fails, the proceeds from the other stocks and bonds purchased will help mitigate the loss, making it less noticeable. At the same time, the loss is shared by a large group of people so that even if a slight overall loss is experienced as the result it will be much less noticeable that if the stock purchased was yours and your alone.

Finally, the fact that the funds are already diversified to a large degree helps insulate from huge fluctuations in the market such as those seen recently when the sub prime mortgage industry bubble popped leaving many investors ducking for cover.As you can see there are some differences between stocks and mutual funds.

How To Invest In International Mutual Funds

By: Ada Denis

International mutual funds invest in markets outside of the United States and across the globe. These funds can be good for diversifying and adding balance to a portfolio. Generally, international funds are more volatile than their domestic counterparts. However, the rewards of investing in foreign markets can be many, allowing investors to fatten their wallets with more than just local opportunities.

1. Understand the difference between international funds and global funds. International funds typically focus on investing outside the United States; global funds invest both inside and outside of the United States.

2. Recognize that investing in international mutual funds provides a way of breaking into foreign markets without the risks brought on by investing with little applicable knowledge. Professional mutual fund managers bring experience and in-depth research to the table, boosting your chances of profiting from your investment.

3. Carefully evaluate the level of risk you can take and your investment time horizon.

4. Determine the portion of your assets you can afford to invest in international mutual funds.

5. Understand that international mutual funds may invest in stocks and/or bonds from markets around the world. An international fund may focus on a particular market or a combination of markets.

6. Recognize that you may need to sit out some rough times in order to realize an international fund's full potential.

7. Consider the fact that international funds may help you to lower your overall investment risk. As the world's markets do not move exactly in tune with each other, you could capitalize on a thriving market in one region, even while trouble brews in another country.

8. Research and compare international mutual funds online, using MorningStar.com.

9. Visit the websites of the funds that interest you and request or download prospectuses.

10. Contact a financial adviser to discuss the portion of your portfolio best allocated to international mutual funds. With the adviser's help, invest in the mutual funds best suited to your goals, risk tolerance and time horizon.

Little Known Ways Regarding Mutual Funds Portfolio : Learn About Helpful Solutions Now

By: Nathan Knightley

I had never thought of hiring an investment management business before. Actually, I always took a very hands-on approach to business. I learned it from my father - himself an entrepreneur. He never believed in investment capital management by hiring a broker. By doing the paperwork himself, he cumulated a financial fortune. Yes, he worked almost 80 hours every week and had a fatal hearth attack at the age of 58, so there are things about his life that I don't really want to repeat. Even so, managing investment myself was not an easy habit to break.

Nevertheless, eventually I just couldn't handle it any longer. I don't know if my investment portfolio had grown too diverse, too large, or if I just didn't have my father's talent for figures. For whatever reason, I was too busy to manage the family business and manage my investments. It was obviously what I had to give up. I hired a good capital asset management company the very next day.

A lot of things have been difficult about the new mutual funds company. The most hard, of course, was to give up some control on my investments. I tried to keep as tight a leash as possible as soon as I hired the investments management firm. I needed to know about every move, consent to each decision, and in general. keep my hands in the pie at all times. After a while, my broker talked to me honestly. He told me that there was no necessity to hire an investment manager if I was keeping trying to do all the work anyway. He then asked me quite straightforwardly if I still wanted him to take care of my mutual funds management or not. I backed down, understanding he was right.

Recognizing the fact that this firm has done a better job than I have was the hardest thing about investment management. Even with the cash that I have to pay them, I am still making a large amount more off of my investments than I ever have before. My investment portfolio has grown at twice its normal rate the last twelve months, and it does not seem that it is going to slow down. I had almost expected having to take control back at first. Part of me was even hoping that investment management would turn out to be a bad experiment. After all, it is difficult to admit that a third party can be more efficient than you are.

Medium Term Note Trading And Their Importance In A Worldwide Recession

By: marcelford

Private Trading of Medium Term Notes, also known as Mid-Term Notes and MTNs, is essentially capital raised for the purposes of the development of working capital and the upward trend towards strengthening a company's balance sheet. More times than naught, private trade programs encompass the development of new products, technologies and overall expansion. Whereas in this article, In the broad sense and in the most known categorization, we will be discussing Medium Term Note Private Trading which is a completely different investment channel generating tremendous returns for small and large, individual and corporate investors alike.

Investors have limited access when it comes to educating themselves and investing in the high-yield arena of MTN Trading. Unless they have liquidity in the hundreds of millions, most others who have less liquidity for investment find themselves on the outside trying to get a peek in. In this article, the general development of knowledge with regard to private trading, MTNs, BGs and other instrument facets, will explain why and where individuals willing to invest from $10M on up can participate in the world of Medium Term Note Trading.

Why is there such a demand for investing in Private Programs that utilize MTNs and on occasion Treasury Bills?

Since the mid-1990's to the present day, Medium term Note originations total investment dollars have escalated from a estimated, yet traceable, phase of just over $10 billion dollars in mid-1990s to a current level of well over $75 billion dollars through the third quarter of 2008. There have been roughly 6,500 private trade programs done through the third quarter of 2008. Companies in the likes of Sony Capital, Harley Davidson, LG and other well recognized entities have all offered Mid-Term Notes collateralized by their assets for expansion and development. From a low of fewer than 2,500 in all of 1996, you can see that the interest towards Private Trading gains when markets and the economy as a whole degrades catapulting the need for short term, well secured notes backed by established corporations, banks, asset holders and countries.

Hedge Funds, Portfolio Managers and Private Investors are often attracted to these Private Programs and understand the rules and guidelines that follow. Less experienced, smaller investors tend to be dismissed due to the anxiety levels and continuous pestering of updates. High-net worth, seasoned investors have their blocked funds almost always are combined with other clients to build a larger trade bases, if individually large enough, say one billion and up, enter into a Private Trade Program by themselves; however they too may very well be bundled with other client assets to reduce the number of trades being managed. Their blocked funds represent these MTN Trade Programs and are a tremendous economic incentive in their own right by the generation of liquidity by the function of process.

The derived profits most often than not, as well as the leveraged amount of the blocked funds, will go into further capitalization of new companies believed to have significant growth possibilities in industries such as: healthcare, bio-technologies, software/hardware and telecommunications. These Private Trade Programs add value to these companies and further compel advancements in those particular sectors.

Without Medium Term Notes, the potential of utilizing them in Private Trading and the profits derived from such, many of the participants of these programs would never launch over the first tier with regards to the programs they are included in.

Typical Minimum Investment Requirement:

Mid-Term Note Trading and investing is not easily accessible to the typical high-net worth investor or well capitalized corporation unless they first know these types of programs exist and then are either introduced to the trading platform from a referring client or through a series of referral educational sites where the client can thereafter request admission. Most Trade Programs typically will accept investors who are willing to commit as little as $25 million to have blocked for the purposes of leverage. Although some Trade Managers have dropped their minimums to only $250K with coupled by a series of A,B,C programs to ramp up the clients capital to higher level trades.

Fund of Funds:

A fund of funds holds the leveraged funds of many private partnerships that invest in private trades. It provides a way for firms and individual participants to increase cost effectiveness and thereby reduce their minimum investment requirement. Since a fund of funds is leveraging against those original funds, sometimes up to 20 to 50 times, the accumulated return for that specific funds of funds becomes much more lucrative.

In addition, because of its size and diversification, a fund of funds has the potential to offer greater returns than you might experience with an individual MTN Trade Program. This only holds true to those Programs that are under the $100 million dollar level though since most times the lesser amounts are leveraged through funds of funds or equivalent means.

The main disadvantage, if it could be considered such, is that there is an additional layer of fees paid to the fund of funds manager. Though typically $100 million and up will roll out the welcome mat, investors can on occasion, participate with $250,000 - $10 million to the respective fund of funds manager. For those smaller amounts under $10 million, the platform manager may not let you participate unless you are an accredited investor with a net worth between $1.5 million to $5 million.

Is it worth the time and consideration?

There are several key risks in any type of investing since you essentially, with any investment, can guarantee a return (except for low yielding T-Bills, etc.) Private Trading is no exception. As mentioned earlier, the fees of Private Trade Programs that cater to smaller investors can be higher than you would normally expect with conventional investments, such as mutual funds. With a pre-established historical return rate on these smaller (less than $100M) funds may be in the double to triple digits as reflected in previous scenarios. The promulgation of these fees are irrespective and of little consequence to the investor although many investors feel that they deserve more, do essentially doing very little.

In a market as volatile as the one we currently face, it is much harder to find streamlined programs that offer little risk. Transferring of investors' funds is not evidenced in these Private Trade Programs that are at or above $10 million dollars. A block is placed on the client's funds within their account for the duration of the trading period. Hence, the safety the client experiences remains secure with the leveraged program they enter into.

Understanding Bonds

By: Olori Ajie

There are certain things you must understand about bonds before you start investing in them. Not understanding these things may cause you to purchase the wrong bonds, at the wrong maturity date.

The three most important things that must be considered when purchasing a bond include the par value, the maturity date, and the coupon rate.

The par value of a bond refers to the amount of money you will receive when the bond reaches its maturity date. In other words, you will receive your initial investment back when the bond reaches maturity.

The maturity date is of course the date that the bond will reach its full value. On this date, you will receive your initial investment, plus the interest that your money has earned.

Corporate and State and Local Government bonds can be ‘called’ before they reach their maturity, at which time the corporation or issuing Government will return your initial investment, along with the interest that it has earned thus far. Federal bonds cannot be ‘called.’

The coupon rate is the interest that you will receive when the bond reaches maturity. This number is written as a percentage, and you must use other information to find out what the interest will be. A bond that has a par value of $2000, with a coupon rate of 5% would earn $100 per year until it reaches maturity.

Because bonds are not issued by banks, many people don’t understand how to go about buying one. There are two ways this can be done.

You can use a broker or brokerage firm to make the purchase for you or you can go directly to the Government. If you use a brokerage, you will more than likely be charged a commission fee. If you want to use a broker, shop around for the lowest commissions!

Purchasing directly through the Government isn’t nearly as hard as it once was. There is a program called Treasury Direct which will allow you to purchase bonds and all of your bonds will be held in one account, that you will have easy access to. This will allow you to avoid using a broker or brokerage firm.

Carbon Emission Trading, The Basics Explained

By: Dwayne Strocen

The Kyoto Protocol is a UN-led international agreement reached in 1997 in Kyoto, Japan to address the problems of climate change and the reduction greenhouse gas emissions. The Kyoto Protocol went into force on February 2005.

Signatory countries are committed to moving away from fossil fuel energy sources - oil, gas, and coal, to renewable sources of energy such as hydro, wind and solar power, and to less environmentally harmful ways of burning fossil fuels. Greenhouse gases such as carbon dioxide, methane and nitrous oxide are mainly generated by burning fossil fuels. Higher levels of greenhouse gas emissions cause global warming and climate change.

The Protocol commits 38 industrialized countries to cut greenhouse gas emissions by 2008-2012 to overall levels that are 5.2 percent below 1990 levels. Targets for greenhouse gas emissions reduction were established for each industrialized country. Developing countries including China and India were asked to set voluntary targets for greenhouse gas emissions.

The Canadian target for Kyoto is to reduce by 2012, greenhouse gas emissions by six percent below their 1990. The United States did not ratify the Kyoto Protocol, and in February 2002 introduced the Clean Skies and Global Climate Change initiatives, in which targets for reduction in greenhouse gas emissions are linked directly to GDP and the size of the U.S. economy.

Trading of carbon emissions is linked to a program called Cap-and-Trade. Understanding this concept is necessary to begin effective trading. A central authority (usually a government or international body) sets a limit or cap on the amount of emissions discharged into the atmosphere. Companies that exceed the cap may be subject to fine or regulatory sanction. Therefore, those who find they cannot meet the conditions of the cap will look to buy credits from those who pollute less.

Many older established companies are forced to spend considerable sums of money modernizing plants. In many instances this takes time, usually years to achieve. In contrast to new generation technologies which are not faced with up-grading facilities to comply with 1990 emission standards. Trading emission credits is a way for low emission companies such as wind farms to sell credits to benefit higher emitting companies. Cap-and-trade programs ultimately aid in being a net benefit to the host country by enabling it to meet it's commitment to the Kyoto Protocol Agreement.

From the very beginning, this first phase of the European Union Emissions Trading Scheme, or EU-ETS, was intended to be a learning period to work out the kinks and entice major greenhouse gas emitters on board.

On January 1, 2005, the EU-ETS came online with the cap-and-trade program covering approximately 12,000 installations including electricity production and some heavy industry. These 27 member countries of the European Union represents roughly 45 percent of total European CO2 emissions.

Now three years later, amid a flurry of expectations and public controversy, the European Union has credible results to back up its claim of success. Recently, a Massachusetts Institute of Technology analysis of the EU Emissions Trading Scheme (ETS) affirms that despite rather unstable beginnings, the system has been an unprecedented success. More importantly, it opens the door for skeptical countries like the United States to follow suit.

The United States would have been required to reduce its emissions 7 percent below 1990 levels had it accepted ratification of Kyoto. Instead, U.S. emissions have now risen more than 16 percent between 1990 and 2005.

The Bush administration and Republican lawmakers opposed to emission caps have been touting the Asia-Pacific Partnership on Clean Development and Climate, which consists of Australia, China, India, Japan, South Korea, and the United States. The aim of the initiative, which began in 2005, is to foster cooperation on ways to improve clean energy development and lower emissions without global mandates. But since the initiative started, the United States, India, and China have come under increased domestic pressure to move toward mandatory emission controls. California is among several U.S. states that have entered into partnerships or passed laws for controlling greenhouse gases ahead of the federal government, leading to a showdown with congressional lawmakers. Major U.S. cities have also instituted a host of policies designed to cut greenhouse gases.

Without the United States entering into a binding commitment, it is feared that several developing countries which have not yet signed plus some Kyoto signatories may be unwilling to agree to additional international commitments.

About The Author:

Dwayne Strocen is a registered Commodity Trading Advisor specializing in analyzing and hedging Market and Operational Risk using exchange traded and OTC derivatives. Website: www.genuineCTA.com.

View in depth information about Carbon Emissions and the benefits of hedging its risk.