Essay on Mutual Fund Tutorial : Asset Allocation
Asset allocation refers to the division of your portfolio to different asset classes such as money-market securities, bonds, stocks and their appropriate subcategories. An asset allocation fund follows this principle by holding several asset categories. One of many Types Of Mutual Funds.
These funds invest in a combination of bonds and stocks of various sorts depending on their stated objectives.
The opposite of open-end funds, closed-end funds place their shares on the exchange so investors can buy or sell like over-the-counter stocks. Because shares can be traded at discount, NAV, or premium, close-end funds introduce an additional dimension of risk and return.
Convertible Bond Funds
A convertible security gives the holder the right to convert one type of security into a stipulated amount of another type at the investor’s discretion. Convertible Bond Funds invest in bonds that can be converted into preferred or common stock. The benefit is that if an issuing company performs well after the issuance of the convertibles, the fund will be able to gain by converting the bonds into the now-more-valuable stock.
Advantages to Issuing Companies on these Types Of Mutual Funds
Lower interest rate on its debt – The fund is, in effect, substituting the certain stream on interest payments for the uncertainty of…