Financial Knowledge

Fund Basics

This section summarizes the basic concepts worth knowing before you invest in a fund, including how funds are structured and classified, NAV per unit and redemption, fees and charges, and asset management reports. Be sure to check the terms of any individual fund in that fund's prospectus.

इस पृष्ठ का हिन्दी संस्करण तैयार हो रहा है। तब तक सामग्री अंग्रेज़ी में दिखाई जा रही है।

56 questions · Last updated

  1. 01What is a fund?
  2. 02What exactly does 'collective investment' mean under the law?
  3. 03Is my principal guaranteed if I invest in a fund?
  4. 04What are the advantages and disadvantages of investing in funds?
  5. 05How is a fund different from a discretionary investment account or a trust?
  6. 06What is the difference between an investment trust and an investment company?
  7. 07What legal forms can a fund take?
  8. 08How are funds classified by what they invest in?
  9. 09How are equity, bond and hybrid funds distinguished?
  10. 10What are special asset funds and mixed asset funds?
  11. 11What kind of product is an MMF (money market fund)?
  12. 12What is a business development collective investment vehicle (BDC)?
  13. 13Which companies are involved in a fund?
  14. 14What role does a fund distributor play?
  15. 15What does a trust company (trustee) do?
  16. 16What happens to my fund assets if the asset management company goes out of business?
  17. 17If the distributor can no longer do business, where do I request redemption?
  18. 18What is the NAV per unit?
  19. 19What does NAV (net asset value) mean?
  20. 20How are fund assets valued?
  21. 21What do fund 'establishment' and 'termination' mean?
  22. 22What is fund redemption?
  23. 23When will I receive my money after requesting redemption?
  24. 24Which day's price applies when I redeem?
  25. 25Why do I have to pay a redemption fee?
  26. 26Can a fund redemption be postponed?
  27. 27How do a fund's 'fees' and 'charges' differ?
  28. 28What types of fund fees are there?
  29. 29What are front-end and back-end sales charges?
  30. 30What do fund classes (Class A, Class C, etc.) mean?
  31. 31What is a multi-class fund?
  32. 32What is a 'listed class' of a public fund?
  33. 33What is the total expense ratio (TER)?
  34. 34Are there funds that charge performance fees?
  35. 35What is the difference between open-end and closed-end funds?
  36. 36How do I cash out of a public fund that cannot be redeemed?
  37. 37What is a master-feeder (parent-child) fund structure?
  38. 38What is a fund of funds?
  39. 39What is a switching (umbrella) fund?
  40. 40What is an index fund?
  41. 41How is an ETF (exchange-traded fund) different from an ordinary fund?
  42. 42What are leveraged ETFs and inverse ETFs?
  43. 43What is an asset management report and how often will I receive it?
  44. 44How does the asset custody and administration report differ from the management report?
  45. 45What is a fund prospectus and why is it important?
  46. 46What do the collective investment rules (trust agreement) contain?
  47. 47Why look at a fund's benchmark?
  48. 48Where can I check a fund's returns or NAV per unit?
  49. 49Will investors be notified if something important changes in a fund?
  50. 50What is a fund rating company?
  51. 51How is a fund's risk grade shown?
  52. 52What are offshore funds and onshore funds?
  53. 53How much can a public fund invest in a single security?
  54. 54What is a TDF (target date fund)?
  55. 55What kind of product is a target-conversion fund?
  56. 56How are a fund's profits distributed?

General financial information, not investment advice. Rules and tax rates change; please check the latest guidance from the source institution.