Mutual Funds

Are Recessions Good For Stocks?

Published: Wed, 05 Aug 2020 15:58:23 +0000

Market Blog This isn’t like any recession we’ve ever seen, as it was sparked by a horrible pandemic and happened because people were told to stay inside. The impact was the worst contraction in gross domestic product (GDP) last quarter … Continue reading →

Market Update: Wed, Aug 5, 2020 | LPL Financial Research

Published: Wed, 05 Aug 2020 15:26:10 +0000

DAILY INSIGHTS Stocks opened higher. US stock markets opened in the green, with the Nasdaq reaching its 30th new record high of 2020. Investors are focusing on positive earnings reports, developments on the COVID-19 relief bill, vaccine progress, and jobs … Continue reading →

The Worst Years for Treasuries Don’t Look Like This…Except One

Published: Tue, 04 Aug 2020 15:57:52 +0000

Economic Blog The 10-year Treasury yield is historically low, so low that it could climb a full 1% before the end of the year and still be the lowest year-end yield on record, with room to spare. Historically low rates … Continue reading →

Market Update: Tue, Aug 4, 2020 | LPL Financial Research

Published: Tue, 04 Aug 2020 14:58:57 +0000

DAILY INSIGHTS Stocks opened slightly lower. The S&P 500 Index is down slightly in early trading on a quiet day for economic data. Tuesday, market participants will focus on stimulus talks in Washington, United States and China tensions, earnings season, … Continue reading →

The Clock Starts Today on This Historically Accurate Election Winner Indicator

Published: Mon, 03 Aug 2020 15:58:17 +0000

Market Blog 2020 has been historic and devastating in many ways, from the fastest bear market ever, to one of the greatest stock market recoveries ever. Not to mention a historic drop in the economy in the second quarter, with … Continue reading →

Market Update: Mon, Aug 3, 2020 | LPL Financial Research

Published: Mon, 03 Aug 2020 14:58:40 +0000

DAILY INSIGHTS Stocks start the week on a positive note. The S&P 500 Index is set to open higher this morning to kick off August, a month that historically has been one of its weakest, after a strong 5.5% gain … Continue reading →

Weekly Market Performance – Markets Steadfast Amid Economic and Earnings Reports

Published: Fri, 31 Jul 2020 20:01:15 +0000

Market Blog Index Performance S&P 500 Index: 1.7% Dow Jones Industrial Average: -.2% Nasdaq Composite: 3.7% Equities This week was another mixed week for the markets, as large cap growth earnings powered tech behemoths and the Nasdaq to more than … Continue reading →

Do the Top 5 Stocks Pose a Risk to the Market?

Published: Fri, 31 Jul 2020 15:57:58 +0000

Market Blog Apple, Microsoft, Amazon, Google, and Facebook. These five stocks have helped spawn a number of acronyms as they try to capture the rise of mega-cap tech stocks that have led the market higher for much of the past … Continue reading →

Market Update: Fri, Jul 31, 2020 | LPL Financial Research

Published: Fri, 31 Jul 2020 14:58:13 +0000

DAILY INSIGHTS Tech stocks fuel gains to end week. The S&P 500 Index is marginally higher in early trading, as large cap growth stocks fuel gains in the technology, consumer discretionary, and communication services sectors. Asian markets were mostly lower, … Continue reading →

Biggest GDP Contraction Ever

Published: Thu, 30 Jul 2020 17:45:13 +0000

Economic Blog The best thing we can say about today’s US gross domestic product (GDP) report for the second quarter is that it’s behind us. GDP contracted at a 32.9% annualized rate during the quarter, the largest decline on record. … Continue reading →

Fed Says We’ve Got Your Back For As Long As It Takes

Published: Thu, 30 Jul 2020 15:58:17 +0000

Economic Blog The Federal Reserve (Fed) completed its latest two-day policy meeting Wednesday, July 29, and the primary message coming from the world’s most important central bank was a continued commitment to supporting the economy as long as it’s needed—and … Continue reading →

Market Update: Thu, Jul 30, 2020 | LPL Financial Research

Published: Thu, 30 Jul 2020 14:59:52 +0000

DAILY INSIGHTS Stocks opened lower on big news day. Futures were already lower ahead of the historic gross domestic product (GDP) report and jobless claims data and those data points didn’t change the picture much. Asian markets were modestly lower … Continue reading →

All That Glitters Is Gold

Published: Wed, 29 Jul 2020 15:56:41 +0000

Market Blog “An object in motion tends to remain in motion along a straight line unless acted upon by an outside force.” Sir Isaac Newton Last September, we noted that gold had many structural reasons to soar. Well, soar it … Continue reading →

Market Update: Wed, Jul 29, 2020 | LPL Financial Research

Published: Wed, 29 Jul 2020 15:03:11 +0000

DAILY INSIGHTS Markets showing resilience. After finishing near their lowest trading levels Tuesday, US markets opened higher this morning. Investors are gauging the wide differences between Republicans and Democrats on the next fiscal stimulus package given the present economic climate. … Continue reading →

High-Frequency Data Reflects Pause in Recovery

Published: Tue, 28 Jul 2020 15:57:37 +0000

Economic Blog After carving out the first part of a “V-shaped” recovery, the US economy has leveled off somewhat in response to the latest wave of COVID-19 infections. In this week’s Weekly Market Commentary: Stalling Economic Recovery May Slow Stock … Continue reading →

Market Update: Tue, Jul 28, 2020 | LPL Financial Research

Published: Tue, 28 Jul 2020 15:00:09 +0000

DAILY INSIGHTS S&P 500 slightly lower with stimulus, virus in focus. The S&P 500 Index is slightly lower early today as market participants continue to assess stimulus progress, COVID-19 case growth, and earnings. The S&P 500 climbed 0.7% Monday as … Continue reading →

That’s Not A Bubble, This Is A Bubble

Published: Mon, 27 Jul 2020 15:57:36 +0000

Market Blog “That’s not a knife … that’s a knife!” Paul Hogan in Crocodile Dundee There is growing talk that growth stocks and specifically technology stocks are in a bubble. But as Paul Hogan showed is in the classic 1986 … Continue reading →

Market Update: Mon, Jul 27, 2020 | LPL Financial Research

Published: Mon, 27 Jul 2020 14:57:53 +0000

DAILY INSIGHTS Stocks opened higher. After ending last week on a down note and seeing its three-week win streak snapped, the S&P 500 Index is in the green in early trading this morning. Markets are awaiting the release of the … Continue reading →

Weekly Market Performance – Markets and Stimulus Measures

Published: Fri, 24 Jul 2020 20:02:13 +0000

Market Blog Index Performance S&P 500 Index: -0.3% Dow Jones Industrial Average: -0.8% Nasdaq Composite: -1.3% Equities Large cap US equities pulled back modestly this week, as technology-oriented stocks paused for the second consecutive week. The Nasdaq fell more than … Continue reading →

Leading Indicators Elicit Cautious Optimism

Published: Fri, 24 Jul 2020 15:58:22 +0000

Leading economic indicators continued to rebound in June, albeit at a slightly slower pace than in May. Yesterday, The Conference Board released its June report detailing the latest reading for its Leading Economic Index (LEI), a composite of data series … Continue reading →

Market Update: Fri, Jul 24, 2020 | LPL Financial Research

Published: Fri, 24 Jul 2020 14:59:02 +0000

DAILY INSIGHTS Down again. US stocks opened lower following Thursday’s broad weakness. Caution is in the air, as China retaliated by shutting down the US consulate in Chengdu. Asian markets were down significantly on the news. European markets are firmly … Continue reading →

Dollar Weakness May Continue

Published: Thu, 23 Jul 2020 16:00:01 +0000

Economic Blog The US dollar was remarkably strong during the first quarter of 2020, benefitting from the flight to safety and rallying to nearly a 10% year-to-date gain at the stock market’s low point on March 23. However, as equity … Continue reading →

Market Update: Thur, Jul 23, 2020 | LPL Financial Research

Published: Thu, 23 Jul 2020 14:59:17 +0000

DAILY INSIGHTS Stocks opened little changed. The S&P 500 Index is trying for its sixth straight positive session as mostly well-received earnings results and optimism that the next big stimulus package out of Washington, DC, will soon be secured are … Continue reading →

Street View: Midyear Outlook 2020

Published: Wed, 22 Jul 2020 17:57:47 +0000

Market Blog LPL Research released our Midyear Outlook 2020 last week, discussing the path of the eventual economic and market recovery. What makes this year so incredible is, as of July 21, the S&P 500 Index moved positive for the … Continue reading →

Market Update: Wed, Jul 22, 2020 | LPL Financial Research

Published: Wed, 22 Jul 2020 14:59:15 +0000

DAILY INSIGHTS Mixed markets. US stocks opened mixed, as Tuesday the S&P 500 Index moved to its highest level since February. Caution is in the air as the United States ordered China to close its consulate in Houston, fueling potential … Continue reading →

Let’s Get Real About Yields

Published: Tue, 21 Jul 2020 15:58:12 +0000

Economic Blog While the 10-year Treasury yield has traded in a narrow range since early April, the equivalent real yield, represented by the yield on 10-year Treasury inflation-protected securities (TIPS), has continued to fall and could go lower. Real yields … Continue reading →

Market Update: Tue, Jul 21, 2020 | LPL Financial Research

Published: Tue, 21 Jul 2020 15:02:04 +0000

DAILY INSIGHTS Stimulus, vaccine optimism supporting gains in global stocks. Most major international indexes extended Monday’s US gains overnight as investors digest Europe’s approximately $850 billion fiscal stimulus package and continued positive news on vaccine progress. Tech-related stocks led yesterday’s … Continue reading →

Market Update: Mon, Jul 20, 2020 | LPL Financial Research

Published: Mon, 20 Jul 2020 14:57:05 +0000

DAILY INSIGHTS US stocks opened little changed. The S&P 500 Index, which ended last week fractionally shy of positive territory year to date, will try to continue its three-week win streak as markets focus on flattening the COVID-19 curve, vaccine … Continue reading →

Weekly Market Performance – Markets Move Ahead

Published: Fri, 17 Jul 2020 20:01:35 +0000

Market Blog Index Performance S&P 500 Index: 1.3 % Dow Jones Industrial Average: 2.3 % Nasdaq Composite: -1.1 % Equities US equities delivered modest gains this week, with indexes representing both the midcap and small cap spaces faring best. Both the S&P … Continue reading →

Retail Sales Beat Again

Published: Fri, 17 Jul 2020 16:00:25 +0000

Economic Blog Retail sales data for June was reported on Thursday, handily beating expectations for the second consecutive month. As shown in the LPL Chart of the Day, June saw a 7.5% increase month over month, compared with Bloomberg’s consensus … Continue reading →

Market Update: Fri, Jul 17, 2020 | LPL Financial Research

Published: Fri, 17 Jul 2020 14:56:45 +0000

DAILY INSIGHTS Stocks steady heading into weekend. US stocks are near flat in early trading, as investors continue to digest earnings, including a poorly received report from Netflix, which is down nearly 10%. Major US indexes are tracking toward modest … Continue reading →

Fed Beige Book Shows Progress

Published: Thu, 16 Jul 2020 15:59:45 +0000

Economic Blog The gradual reopening of the US economy has started to lift Main Street sentiment from depressed levels, according to the Federal Reserve’s (Fed) Beige Book. Despite growing concerns about rising COVID-19 cases in several pockets of the country, … Continue reading →

Market Update: Thur, Jul 16, 2020 | LPL Financial Research

Published: Thu, 16 Jul 2020 15:58:41 +0000

DAILY INSIGHTS US stocks opened lower. Markets are giving back some of Wednesday’s rally this morning following losses in China overnight and amid ongoing concerns about COVID-19 hotspots. In the United States, markets will watch earnings reports, retail sales, and … Continue reading →

Real-Time Data Recovery Stalled Amid COVID-19 Resurgence

Published: Wed, 15 Jul 2020 15:57:51 +0000

Economic Blog We check in again today on some of the real-time economic data that LPL Research is monitoring to provide insight into how the latest increase in COVID-19 cases and the rollback of certain reopening measures are affecting the … Continue reading →

Market Update: Wed, Jul 15, 2020 | LPL Financial Research

Published: Wed, 15 Jul 2020 14:56:03 +0000

DAILY INSIGHTS US markets rallying on positive vaccine buzz. The S&P 500 Index is set to add to Tuesday’s solid gains after positive early-phase trial results for Moderna’s COVID-19 vaccine took some of the sting out of the recent surge … Continue reading →

Why A Potential Democrat Sweep May Not Be A Market Worry

Published: Wed, 15 Jul 2020 14:27:21 +0000

Market Blog Based on the latest polling data, there’s growing consensus that former Vice President Joe Biden potentially may win the election and Democrats possibly may sweep Congress. Some might think this could be a negative for stocks, as a … Continue reading →

Fund Flows Favor Bonds Over Stocks, but Returns May Not Follow

Published: Tue, 14 Jul 2020 19:32:32 +0000

Economic Blog After pulling back in the first quarter of 2020, flows into bond mutual funds and exchange-traded funds (ETFs) dominated stocks in the second quarter. As shown in the LPL Chart of the Day, the second quarter is consistent … Continue reading →

Market Update: Tue, Jul 14, 2020 | LPL Financial Research

Published: Tue, 14 Jul 2020 14:59:09 +0000

DAILY INSIGHTS US stocks look to rebound from Monday’s up and down day. US markets are near flat early as market participants weigh the significance of the economy likely turning the corner over the second half of the year against … Continue reading →

LPL Financial Research Midyear Outlook 2020: Coming Soon!

Published: Mon, 13 Jul 2020 16:47:24 +0000

Market Blog Here at the midpoint of 2020, we recognize that’s it’s been a very challenging year so far in the United States and around the world. Our team is here to help you navigate this environment. LPL Research’s Midyear … Continue reading →

Market Update: Mon, Jul 13, 2020 | LPL Financial Research

Published: Mon, 13 Jul 2020 15:01:30 +0000

DAILY INSIGHTS U.S. stocks opened higher. US stocks continue to shrug off rising COVID-19 cases as markets focus on the strength in stay-at-home stocks (mostly technology), optimism around virus treatments, and Americans’ will to avoid locking down again. The S&P … Continue reading →

Mutual Fund Basics

A mutual fund pools the money of many investors to purchase securities. The fund's manager buys securities to pursue a stated investment strategy. By investing in the fund, you'll own a piece of the total portfolio of securities, which could be anywhere from a few dozen to hundreds of stocks. This provides you with a convenient way to obtain instant diversification that would be harder to achieve on your own.

More Information on Mutual Funds

Types of mutual funds

There are many mutual funds to choose from. The two most common types are stock mutual funds and bond mutual funds. A stock fund invests in common stocks issued by U.S. and/or international companies. Funds are often named and classified according to investment style or objective, which can be stated in various ways. For example, some stock mutual funds buy stocks in companies believed to have potential for long-term growth in share price. Other stock mutual funds look for current income by focusing on companies that pay dividends. Sector funds buy stocks in a particular sector, such as technology or health care. Still other mutual funds may purchase stocks based on the size of the company (e.g., stocks of large, mid-size, or small companies).

Although the name of a stock mutual fund generally offers insight into its investment style and objective, it is important not to rely on the name alone in determining whether a particular fund is what you want. The fund prospectus is like an owner's manual and contains information about the kind of investment style that the manager(s) employ, and the kinds of stocks that the fund will buy.

Note: Before investing in any mutual fund, carefully consider its investment objectives, risks, fees, and expenses, which are discussed in the prospectus available from the fund. Read the prospectus carefully before investing.

A bond fund is made up of debt instruments that governments or corporations issue to raise capital. They are designed to provide investors with interest income in the form of regularly scheduled dividends. If you bought individual bonds, you would need to concern yourself with their maturity dates and the reinvestment of your funds. Buying shares of a bond fund relieves you of these concerns; the fund manager handles them for you.

Bond funds are primarily classified according to the issuers of the bonds in the fund's portfolio and/or to the term of the bonds. For example, municipal bond funds buy bonds issued by municipalities. The income from these is free from federal tax (however, a portion of the income may be subject to the federal alternative minimum tax) and may be free from state and local taxes. Similarly, some funds invest only in U.S. Treasury debt instruments (e.g., bonds, bills, and notes) or high-grade (or low-grade) corporate bonds. Some bond funds, from all types of issuers, limit themselves to bonds maturing in the short, intermediate, or long term.

There are other types of mutual funds that you will encounter. Funds that invest in both stocks and bonds (or stocks, bonds, and cash alternatives) are often known as balanced funds. A money market fund buys extremely short-term debt instruments and is often used as a place to put cash, short term, until it is needed elsewhere. (Though a money market fund attempts to maintain a $1 per share value, there is no guarantee it will always do so, and it is possible to lose money investing in a money market fund.) Index funds attempt to duplicate a standardized, broad-based index such as the Standard & Poor's 500 (S&P 500) stock index or Moody's bond index by holding a portfolio of the same securities used by the index in an attempt to match the index's performance as closely as possible.

What are the benefits of investing in a mutual fund?

Diversification: Most mutual funds own dozens or even hundreds of securities. The managers often spread the fund's assets over more than one type of investment (e.g., both stocks and bonds, or stocks from a variety of industries). This exposes you to less potential risk than buying just a few individual securities. If some of the fund's holdings perform poorly, they may be offset by others doing well (though diversification cannot guarantee a profit or ensure against a loss).

Professional money management: When you buy shares in an actively managed mutual fund, part of what you pay for is the fund manager's expertise. The manager analyzes hundreds of securities (both current and contemplated holdings) and makes decisions on what and when to buy and sell.

Small investment amounts: Depending on fund rules, you can open an account and make subsequent contributions with a very small initial investment. You can even set up automatic investments through a transfer of funds from your bank account.

Liquidity: You can convert your mutual fund investment into cash (i.e., redeem your shares) by making a request to the fund company in writing, over the phone, or on the Internet on any business day.

Of course, mutual funds are not guaranteed investments. The price of all mutual fund shares can change daily, and you'll receive the current value of your shares when you sell--which may be more or less than you paid. All investing involves risk, including the possible loss of principal, and there can be no assurance that any investing strategy will be successful.

Sales charge and other costs

All mutual funds have expenses that investors must pay for, but the sales charge, or load, is probably the most significant and varied among funds. These sales charges are generally paid as commissions to stockbrokers, financial advisors, and insurance agents. The sales charge may be deducted at the time you purchase shares of the mutual fund (front-end load), leaving less to work for you, or it may be charged at the point of redemption (back-end load). Some mutual funds, known as no-load funds, have no sales charges.

Pay attention to a mutual fund's other fees and expenses, as well. Look at a fund's expense ratio, which is calculated by dividing the fund's annual expenses by the fund's average net assets. Expenses affect a fund's net return. The higher the expense ratio, the less money is being put to work for you.

Past performance

Fund managers

One of the advantages of purchasing shares in an actively managed mutual fund is professional money management. The past performance of the fund is a reflection of the fund manager's ability to effectively manage its assets. You should research the current manager's history with the fund; was the fund's performance his or her achievement? If the fund has a new manager, make sure that individual's investment style matches your expectations.

Contact a VyStar Investment Services Financial Advisor today by phone (904) 908-2495 or email VISMarketing@vystarcu.org.

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