Mutual Funds

Advanced Investment & Finance

Presented to: Dr. Ashraf M.K. Elsharkawy

Presented by: Sahar Abd Elnaaim Ahmed
What is a Mutual Fund?

The idea behind a mutual fund is simple: Many people pool their money in a fund,
which invests in various securities. Each investor shares proportionately in the fund's
investment returns -- the income (dividends or interest) paid on the securities and
any capital gains or losses caused by sales of securities the fund holds.

Every mutual fund has a manager, also called an investment adviser, who directs the
fund's investments according to the fund's objective, such as long-term growth, high
current income, or stability of principal. Depending on its objective, a fund may
invest in stocks, bonds, cash investments, or a combination of these financial assets.

What are the Mutual Fund Categories?

1. Small-Cap Growth (SCG)

Small-cap growth funds invest in companies that are considered to grow more
relative to other companies in the same industry and thus earn more. Their value is
usually less than $1 billion and you have probably never heard of them. But don't
worry, they are not worse than the others.

2. Small-Cap Core or Blend (SCC)

This type of funds usually allocates more than 75% for the investment in small
companies. However, the manager is allowed to embark on the investment in larger
companies whenever s/he considers the situation beneficial.

3. Small-Cap Value (SCV)

This type of funds invests in small companies that have proven their steady and
reliable performance. Here the managers don't rely on the greater growth of
company relative to the other companies from the same industry. This type of
investment is advantageous since it provides stocks at beneficial prices that are of
small companies, part of smaller sectors.

4. Mid-Cap Value (MCV)

The managers of these funds invest in medium-sized companies, whose stocks has
been undervalued or overlooked by the industry.

5. Mid-Cap Growth (MCG)

More than 75% are invested in mid-sized companies under this fund. Mid-sized
companies are defined as those that are valued between $1 billion and $5 billion
smackers. Additionally, the managers of this type of fund search for companies that
are believed to outperform the companies in the same industry.

6. Mid-Cap Core or Mid-Cap Blend (MCC)

Again, more than 75% are invested in mid-sized companies. But in this type of fund,
managers seek for companies that are believed to be overlooked by the industry and
as a result are being undervalued.

7. Large-Cap Value (LCV)

This type of fund is investing in huge and mature companies, whose performance
has been overlooked by the public. These companies provide their investors steady
earnings. Additionally, the price of the stock of such companies is generally
considered as a real bargain.

8. Large-Cap Growth (LCG)

These funds concentrate on the investment into huge corporations that are generally
being valued to $5 billion smackers. The fund managers are seeking for companies
that are believed to outperform and outgrow the other companies from the same
industry.

9. Large-Cap Core or Large-Cap Blend (LCC)

These funds invest a big portion of the money on large companies. The fund
managers are searching for corporations that quickly earn cash. Additionally,
corporations that represent overlooked bargains are in the focus of the fund
managers.

10. Multi-Cap Value (MLV)

Fund managers are concentrating on stocks that possess below-average p/e ratios.
Additionally below-average growth figures are preferred. The types of companies
that represent a target to these funds are of any size.

11. Multi-Cap Growth (MLG)

The fund managers of these funds search for companies of any size that are
expected to outperform and outgrow the companies from the same industry.
12. Multi-Cap Core or Blend (MLC)
There is no specific target group of companies. They can be of any size or
performance. It all depends on the choice of the fund manager.

13. International (INTL)

The target markets of these funds are located outside of the USA.

14. Global (GL)

Represent a mixture of both securities within and outside of the US. But, at least
25% of the fund investments are done outside of the US.

15. Emerging Markets (EM)

These funds invest in developing economies that are expected to grow.

16. Equity Income (EI)

At least 65% are invested in dividend-paying securities. This is done in order to
provide for a greater income generation.

17. Flexible Portfolio (FX)

The fund managers put money in different types of assets such as bonds, stocks or
fixed-income. Additionally, the target companies can be of any size.

18. Balanced (BAL)

The ratio of stock to bond in this type of investment is approximately 60% to 40%.
This type of fund is principal-conserving.

19. Science and Technology (ST)

The fund managers of this type allocate 65% of the equity portfolio in stocks from
the science and technology industry.