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  Monday November 20, 2017

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THE MANAGEMENT COMPANY
Learn even more about this topic with the Encyclopedia of Personal Finance™

The management company of a mutual fund creates the mutual fund and manages its operations. In most cases, the management company also acts as investment advisor.

As an investment advisor, a management company buys and sells the fund's stocks, bonds, and other investments. It acts according to the policies of the fund. The investments it chooses must fit the fund's objectives. For example, if a fund is designed to achieve growth, the management company will look for, study and buy investments that offer the right kind of growth potential.

Another responsibility of the investment advisor is to ensure that the fund is appropriately diversified. It may alter the percentages of each holding, or of each security, according to trends in the market as a whole.

Compensation for the fund's managers comes out of the assets of the fund through management fees, which are detailed in the fund's prospectus. The prospectus also includes information about the management company and its key decision makers.

Now, a short discussion of the people who sell you your shares.




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