Mutual fund managers use fake fund names to part you from your money such that you cannot judge what a fund does by its name. Many funds have names that are outright misleading or even deceptive. In the late 1990s, for instance, during the technology stock bubble, some portfolio managers took advantage of publics desire to chase the latest fad by slapping internet in front of their fund names.
The chances of that happening now are possibly lower. As of July 2002, the SEC requires funds to have at least 80% of their assets in securities that their fund name implies, up from 65% previously. This new rule is forcing funds that called themselves something like the Americas Government Fund to either dispose of East Asian government debt if it exceeded 20% of fund assets, or to change the funds name.
Likewise for funds that call themselves an equity income fund but have 25% of assets in stocks that paid no dividends. More than five hundred funds have had to change their names because they failed the 80% rule. Invescos Blue Chip Growth fund, for example, is now called just growth fund, since 60% of its holdings are in technology stocks, and many of those can hardly be called blue chips these days.
The 80% rule still allows mutual funds to invest in just about anything up to 20% of holdings. Why dont you just avoid the entire problem by buying shares of an indexed mutual fund when you only have a selection of mutual funds to select? For this reason I strongly recommend that if you can only buy mutual funds, as in the case of the 401(k then restrict your purchases to indexed funds such as the Vanguard 500 (VFINX). The best you can do is to learn to select individual stocks in your Roth IRA or individual account.
Previous ArticleWebsite Templates – Who Benefits?
Next Article Understanding the Language of a Pet Bird
idea online
The internet makes it easy to start a business idea but what should you start? Discover the right business idea online for you to start with our definitive list of the best idea online. "Idea" is a fundamental concept representing the inception of thoughts, innovations, and solutions. It encapsulates the spark of creativity that ignites progress, guiding individuals towards novel approaches and discoveries. Idea are the seeds from which great achievements grow, fostering ingenuity, problem-solving, and forward-thinking endeavors across all domains.