MUTUAL FUNDS


What exactly is a mutual fund? A mutual fund pools money from hundreds and thousands of investors to construct a portfolio of stocks, bonds, real estate, or other securities, according to its charter. Each investor in the fund gets a slice of the total pie.


Mutual funds make it easy to diversify. Most funds require only moderate minimum investments, from a few hundred to a few thousand dollars, enabling investors to construct a diversified portfolio much more cheaply than they could on their own.


There are many kinds of stock funds. The number of categories is dizzying. Some examples: growth funds, which buy shares of burgeoning companies; sector funds, which buy shares of companies in a particular sector, such as technology or health care; and index funds, which buy shares of every stock in a particular index, such as the S&P 500.


Bond funds come in many different flavors too. There are bond funds for every taste. If you want safe investments, consider government bond funds; if you’re willing to gamble on high-risk investments, try high-yield bond funds; and if you want to keep down your tax bill, try municipal bond funds.


Returns aren’t everything – also consider the risk taken to achieve those returns. Before buying a fund, look at how risky its investments are. Can you tolerate big market swings for a shot at higher returns? If not, stick with low-risk funds. To assess risk level, check these three factors: the fund’s biggest quarterly loss, which will help you brace for the worst; its beta, which measures a fund’s volatility against the S&P 500; and the standard deviation, which shows how much a fund bounces around its average returns.


Low expenses are crucial. In order to cover their expenses – and to make a profit – funds charge a percentage of total assets. At no more than a few percentage points a year, expenses may not sound substantial, but they create a serious drag on performance over time.


Taxes take a big bite out of performance.


 

Mutual Funds offer diversification for portfolios and provide an opportunity to expose portfolios to a broad range of specialty investment styles.  Those styles may include:

  • Large Capitalization Stock Funds
  • Mid-Capitalization Stock Funds
  • Small-Capitalization Stock Funds
  • International Stock Funds

The Stock Funds may also represent the 3 broad investment strategies of growth, value and blend.

Biltmore has no proprietary funds.  All mutual funds used are no-load funds, so there are no hidden incentives to promote one fund over another.  In this way, the client can be assured that they are receiving unbiased advice based on their individual needs.