Mutual Funds

Credit Spreads Limit Bond Performance Outlook

Published: Tue, 19 Jan 2021 17:10:21 +0000

Economic Blog 1/19/2021 Investment-grade credit spreads, the extra yield you get from investment-grade corporate bonds compared to similarly dated US Treasuries, have already tightened to a level you usually only see during the middle of the economic cycle—and that can … Continue reading →

Stocks Open Higher | Daily Market Update

Published: Tue, 19 Jan 2021 16:00:42 +0000

Tuesday, January 19, 2021 Top Story Market Signals Covers It All This week’s Market Signals podcast covers all the latest events impacting markets and the economy: Q4 earnings, a new stimulus proposal, the Democratic blue wave, and President-elect Joe Biden’s … Continue reading →

Weekly Market Performance – Small Caps and Energy Continue To Run

Published: Fri, 15 Jan 2021 21:12:53 +0000

Market Blog January 15, 2021 Index Performance US and International Equities The major market indexes finished the week lower. In addition, many international markets followed in lockstep with their US counterparts. Emerging markets (MSCI EM Index) outperformed developed international markets … Continue reading →

5 Charts on the Democratic Blue Wave

Published: Fri, 15 Jan 2021 17:00:19 +0000

Economic Blog January 15, 2021 One of the top questions we’ve received recently has been what a blue wave may mean for investments. After the Democrats won the two Senate runoff elections in Georgia, they will now control the White … Continue reading →

Retail Sales Down | Daily Market Update

Published: Fri, 15 Jan 2021 16:00:02 +0000

Friday, January 15, 2021 Top Story Retail Sales Worse Than Expected Retail sales in the United States declined 0.7% month over month in December, below all but two of the 70 forecasts in Bloomberg’s consensus survey (US Census Bureau). The … Continue reading →

Our View on Financials Has Improved

Published: Thu, 14 Jan 2021 17:25:56 +0000

Market Blog January 14, 2021 Heading into 2020, we maintained our preference for growth stocks as we believed that earnings growth would become harder to come by as the economic cycle aged, and their robust earnings growth was greatly appealing. … Continue reading →

Jobless Claims Higher | Daily Market Update

Published: Thu, 14 Jan 2021 16:00:27 +0000

Thursday, January 14, 2021 Top Story New Street View Video Sets Positive Tone The stock market has started off 2021 surprisingly well, and LPL Research Chief Market Strategist Ryan Detrick says this bull market is alive and well. “Surprises to … Continue reading →

Small Business Optimism Falls to Recovery Low

Published: Wed, 13 Jan 2021 17:00:38 +0000

Economic Blog 1/13/21 Rising COVID-19 cases and concern about the policy environment put a dent in small business optimism in the month of December, the index’s second straight monthly decline. As shown in the LPL Chart of the Day, the … Continue reading →

Inflation Grew In December | Daily Market Update

Published: Wed, 13 Jan 2021 16:00:57 +0000

Wednesday, January 13, 2021 Top Story Consumer prices in line with forecasts Consumer inflation for December, based on the Consumer Price Index (CPI), grew 0.4% month over month, buoyed by higher gasoline prices. Core inflation, excluding food and energy prices, … Continue reading →

Treasuries Hit Key Levels

Published: Tue, 12 Jan 2021 17:00:41 +0000

Economic Blog 1/12/2021 Treasury yields hit two key levels the first week of 2021. As shown in the LPL Chart of the Day, the 10-year Treasury yield moved above 1% for the first time since March 2020, and the 10-year … Continue reading →

Treasury Yields Rising | Daily Market Update

Published: Tue, 12 Jan 2021 16:00:55 +0000

Tuesday, January 12, 2021 Top Story 2021 Policies Update and the Markets In this week’s Market Signals podcast and video, LPL Research talks about 2021 policy updates and the possibilities of higher taxes and more regulation, more stimulus, higher Treasury … Continue reading →

2021 Policy Outlook Updates | Daily Market Update

Published: Mon, 11 Jan 2021 16:00:53 +0000

Monday, January 11, 2021 Top Story Stocks open modestly lower as investors reassess risk sentiment. The US dollar traded higher with demand supported by higher Treasury European stocks pulled back from a 10-month high in midday trading as Germany underperforms. … Continue reading →

Weekly Market Performance – Markets Take Senate Surprise in Stride

Published: Fri, 08 Jan 2021 21:00:11 +0000

Market Blog January 8, 2021 Index Performance View enlarged chart. US and International Equities This week, we gained clarity on the makeup of Congress with the Georgia US Senate runoff. Democrats will now have control of both chambers of Congress, … Continue reading →

US Jobs Growth Turns Negative

Published: Fri, 08 Jan 2021 17:00:59 +0000

Economic Blog 1/8/2021 The differences in strength between the stock market and real economy were laid bare this week as the stock market surged to new highs while the jobs market continued to deteriorate and remains well short of its … Continue reading →

Jobs Growth is Negative | Daily Market Update

Published: Fri, 08 Jan 2021 16:00:05 +0000

Friday, January 8, 2021 Top Story Jobs Growth Turns Negative The US economy lost 140,000 jobs in December, according to the US Bureau of Labor Statistics, missing Bloomberg survey estimates of a 50,000 gain. This represents the first monthly loss … Continue reading →

Equity Winners and Losers in 2020

Published: Thu, 07 Jan 2021 18:19:52 +0000

Markets Blog 1/07/21 2020 was a good year for stock investors despite unprecedented challenges. After being down more than 30% at the March 2020 lows, the S&P 500 Index ended the year with a solid 18.4% total return. Last year … Continue reading →

Jobless Claims Lower | Daily Market Update

Published: Thu, 07 Jan 2021 16:23:11 +0000

Thursday, January 7, 2021 Top Story LPL Research Condemns Violence in Washington, DC LPL Research condemns the violent actions at the US Capitol Building on Wednesday and hopes for healing in our nation’s political and societal divides. We fully support … Continue reading →

2020 in 20 Charts

Published: Wed, 06 Jan 2021 17:00:50 +0000

Market Blog January 6, 2021 Well, we can officially say goodbye to 2020. Although there still will be many challenges in 2021, we do see much better times ahead. Just how amazing was it? “2020 will go down in history … Continue reading →

2020 In 20 Charts | Daily Market Update

Published: Wed, 06 Jan 2021 16:00:44 +0000

Wednesday, January 6, 2021 Top Story 2020 in 20 Charts 2020 was a historic year in many ways, which made it hard to highlight just a few charts. So in honor of 2020, we picked 20 charts that show how … Continue reading →

Two Tales of 2020 Bond Returns

Published: Tue, 05 Jan 2021 18:18:28 +0000

Economic Blog 1/5/2021 US investment-grade bonds had a solid 2020 despite a tumultuous year overall. The broad Bloomberg Barclays US Aggregate Bond Index had a total return of 7.5%—not as strong as 2019’s 8.7% but its fifth-best year in the … Continue reading →

Markets Are Watching Georgia I Daily Market Update

Published: Tue, 05 Jan 2021 15:57:24 +0000

Tuesday, January 5, 2021 Top Story 10 Lessons LPL Research Learned in 2020 LPL Research reviews its top 10 takeaways from 2020, the year-end Santa Claus Rally, and what the markets are saying about the Georgia runoffs in this week’s … Continue reading →

December Market Insights

Published: Mon, 04 Jan 2021 17:46:29 +0000

Market Blog View enlarged table. US and International Equities The S&P 500 Index, Dow Jones Industrial, and Nasdaq Composite indexes, continued their November run in December. As noted last month, November was a record-breaking month for equities, thanks to … Continue reading →

Welcome to 2021 I Daily Market Update

Published: Mon, 04 Jan 2021 16:42:25 +0000

Monday, January 4, 2021 Daily Insights Markets start the New Year higher. US markets continue their trek higher following last year’s nine-month rally. Market participants appear optimistic for a better 2021 in the wake of COVID-19 vaccine progress and December’s … Continue reading →

Weekly Market Performance – Ending the Year with Stimulus

Published: Thu, 31 Dec 2020 21:02:00 +0000

Market Blog 12/31/2020 US and International Equities As we finish out a challenging year this week, Congress passed COVID-19 relief, providing increased unemployment benefits, small business assistance, along with an additional $600 stimulus payment. In addition, Congress is presently in … Continue reading →

Happy New Year! | Daily Market Update

Published: Thu, 31 Dec 2020 16:00:51 +0000

Thursday, December 31, 2020 Happy New Year to all from LPL Research! We made it through a very challenging 2020. Have a happy, healthy, and safe 2021. Top Story What a big end of year rally means. The S&P 500 … Continue reading →

Why A Year-End Rally Bodes Well For 2021

Published: Thu, 31 Dec 2020 13:00:51 +0000

Market Blog 12/31/2020 Welcome to the last day of 2020! It has been a devastating year in so many ways, yet for investors it has been quite rewarding. Much of the gains in 2020 have taken place the final two … Continue reading →

Housing Data Continues to Surge

Published: Wed, 30 Dec 2020 17:00:47 +0000

Economic Blog 12/30/20 For many economic data series, 2020 has been a roller coaster. Not for housing, however. The onset of the COVID-19 pandemic and social distancing measures jump-started the “nesting” behavioral shift away from urban apartments and into single-family … Continue reading →

Home Prices Continue to Climb | Daily Market Update

Published: Wed, 30 Dec 2020 16:00:31 +0000

Wednesday, December 30, 2020 Top Story Home prices continue to climb. While some industries continue to struggle during the pandemic, housing data in the United States (US) remains a strong point of the US economy. Standard & Poor’s 20-city composite … Continue reading →

Three Fed Takeaways from an Extraordinary Year

Published: Tue, 29 Dec 2020 17:54:05 +0000

Economic Blog 12/29/2020 2020 was an extraordinary year for the Federal Reserve (Fed). The Fed responded swiftly and decisively to the rapidly accelerating financial and economic uncertainty brought on by efforts to contain the COVID-19 pandemic. The current Fed was … Continue reading →

2020 Fed Takeaways | Daily Market Update

Published: Tue, 29 Dec 2020 16:00:03 +0000

Tuesday, December 29, 2020 Top Story Lessons learned from the Fed in 2020. The Federal Reserve (Fed) will remain in focus for markets in 2021. “Don’t fight the Fed” seems like obvious investor guidance in hindsight, but it didn’t in … Continue reading →

Solid Holiday Shopping Season | Daily Market Update

Published: Mon, 28 Dec 2020 16:00:31 +0000

Monday, December 28, 2020 Top Story Solid holiday shopping season. Holiday sales grew 3%, beating forecasts for a 2.4% increase according to MasterCard’s SpendingPulse. Online sales rose 49% year over year. These results were impressive for a recessionary period—the comparable … Continue reading →

Weekly Market Performance – Small Caps Take Advantage of Holiday Cheer

Published: Thu, 24 Dec 2020 17:28:26 +0000

Market Blog 12/24/2020 Data is as of 11:15 AM ET View enlarged chart. US and International Equities This week, concerns about a new COVID-19 strain in the United Kingdom along with new lockdown restrictions have weighed on the markets even … Continue reading →

Markets Close Early Today | Daily Market Update

Published: Thu, 24 Dec 2020 16:00:25 +0000

Thursday, December 24, 2020 Top Story Markets Close Early Today The NYSE and NASDAQ will close at 1 p.m. ET today. The bond markets will close at 2 p.m. ET. All markets will be closed Friday, December 25, and will … Continue reading →

Jobless Claims Beat Expectations | Daily Market Update

Published: Wed, 23 Dec 2020 16:16:32 +0000

Wednesday, December 23, 2020 Top Story Jobless Claims Beat Weekly jobless claims halted their recent skid as 803,000 Americans filed for unemployment insurance according to the US Department of Labor, ahead of Bloomberg consensus estimates of 880,000. Continuing claims also … Continue reading →

Do You Believe In The Santa Claus Rally?

Published: Wed, 23 Dec 2020 15:17:21 +0000

Market Blog 12/23/20 “If Santa should fail to call, bears may come to Broad and Wall.” —Yale Hirsh December is widely known as one of the best months of the year for stocks, but most don’t realize that the majority … Continue reading →

Some Tips on TIPS

Published: Tue, 22 Dec 2020 19:54:06 +0000

Economic Blog 12/22/2020 With concern about inflation rising for some investors, we’ve started to receive questions about Treasury Inflation-Protected Securities, or TIPS. With TIPS, the principal of the bond, the part that’s paid back when the bond matures, is adjusted … Continue reading →

Is Brexit Fishing For A Deal?

Published: Tue, 22 Dec 2020 19:43:39 +0000

Economic Blog 12/22/2020 Brexit, the United Kingdom’s (UK) withdrawal from the European Union (EU), is making news again as it stumbles toward its apparent conclusion on December 31, 2020. The major sticking point now: fish. The UK officially left the … Continue reading →

Stimulus Bill May Help | Daily Market Update

Published: Tue, 22 Dec 2020 16:00:35 +0000

Tuesday, December 22, 2020 Top Story Stimulus Bridges to Recovery Recent economic data shows evidence of slowing momentum in the US economy, but the new stimulus package could keep the recovery moving forward. This week’s Market Signals podcast reviews the … Continue reading →

Stimulus Deal Nears | Daily Market Update

Published: Mon, 21 Dec 2020 16:00:36 +0000

Monday, December 21, 2020 Top Story Stocks Open Lower The S&P 500 Index opened roughly 1.5% lower, while the tech-focused NASDAQ fared better. Stocks are responding to more curbs to contain the spread of COVID-19 and bucking a tailwind created … Continue reading →

Weekly Market Performance – Small Caps Strong in the wake of Dollar Weakness

Published: Fri, 18 Dec 2020 21:00:40 +0000

Market Blog 12/18/20 View enlarged chart. US and International Equities The major market indexes reversed course from last week to finish this week higher. The tech-laded Nasdaq composite was the bright spot, returning 3% this week. So far, the Nasdaq … 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.

Check the background of investment professionals associated with this site on FINRA’s BrokerCheck.