Mutual Fund Stores Offer Mutual Funds
The term "store" is not used so much as "firm" or "company". Sometimes the term brokerage is also used, deriving from the word "broker" or to serve as an intermediary between two parties in making a successful deal. Therefore for the remainder of the article we will use the term "mutual fund company" in lieu of "mutual fund store". A mutual fund company sets up mutual fund products which are then sold to investors. Investors purchase shares of the mutual funds, each share of which lets an investor invest in fractional ownership of many securities at once.
The idea of a mutual fund is that in a single, low-priced share, an investor benefits from diversified holdings of fractional shares of other companies. For example, if any single underlying company collapses, the mutual fund is affected only slightly. Because mutual funds participate in many underlying securities, they tend to grow with the general economic expansion of these select companies.
The Top Three
In the following article, we will talk about the top three mutual fund companies. To participate in their products, contact them by email or phone to set up a brokerage account. Funds are directed into the account either by electronic transfer or by writing a physical check to the brokerage.
1. Vanguard
Vanguard is the largest company by total assets. They have roughly $1 billion from investors who partake in their products. Among their most popular funds are the Standard & Poor 500 index, but they also offer mutual funds in commodities, international stocks, short and long term bonds. Vanguard has a top website on which they may look at their account balances, performance of investments, and new products in which they be interested. Find out more at the Vanguard website.
2. American Funds
The American Funds is perhaps one of the largest funds that has very little publicity. They have just a little under $1 billion in assets spread out over about 30 mutual funds, which makes it the more surprising that many haven't heard of them at all. Most people get access to their funds through a broker's recommendation. They're located in Los Angeles, as a tenant with one of the largest footprints per square footage. Why? The reason is that American Funds sells its funds to investors through third parties such as Edward Jones and A.G. Edwards, and part of their modus operandi is to remain lower profile that these high profile agents. Unlike index funds, their funds are managed so come with high fees charged to all investors. Fund manager salaries are tied to performance averaged over many years which helps reduce risk taking.
3. Fidelity
Fidelity is more similar to its top ranked cousin Vanguard in that it offers many index funds with low fees. They have assets totaling about $700 million, or 30% less than Vanguard. They offer a range of mutual funds that cover things like real estate, high tech, bonds and the gamut that is found at Vanguard. In addition, Fidelity is thought to have the best set of research tools for the common investor.
Choosing A Mutual Fund Company
It isn't easy picking out one particular company, but for most investors the choice seems to be either Vanguard or Fidelity to help get their feet wet. Both of these offer low fee services, and low transaction costs.