In this web conference we will learn about mutual funds as a tool for long-term savings for families.
We will discuss the elements of a fund and costs associated with funds. We will discuss ways in which mutual funds fit into a military families’ financial plan. We will also learn about performance measures and important characteristics of mutual funds highlighted in the prospectus. Finally we will learn about ways in which we can make decisions using fund screeners. We will use several case studies to illustrate.
We construct a model to value the tranches of Freddie Mac
Multi Class Offering Series 2884, and conduct sensitivity analysis in order to make a recommendation in accordance with our client’s goals.
Equity Crowdfunding: Bridging the Gap in Start-Up Financing by Joseph A. GillMonica Pollard
A presentation to the Raj Manek Mentorship Program which provided an overview of crowdfunding, the current legal landscape for equity crowdfunding in Canada, current issues in crowdfunding, and how to prepare a business for an equity crowdfunding raise. Includes the implications of using equity crowdfunding to raise capital for start-up businesses and entrepreneurial ventures.
We construct a model to value the tranches of Freddie Mac
Multi Class Offering Series 2884, and conduct sensitivity analysis in order to make a recommendation in accordance with our client’s goals.
Equity Crowdfunding: Bridging the Gap in Start-Up Financing by Joseph A. GillMonica Pollard
A presentation to the Raj Manek Mentorship Program which provided an overview of crowdfunding, the current legal landscape for equity crowdfunding in Canada, current issues in crowdfunding, and how to prepare a business for an equity crowdfunding raise. Includes the implications of using equity crowdfunding to raise capital for start-up businesses and entrepreneurial ventures.
VanFUNDING 2016: Mechanics of Securities Crowdfunding RegulationsCraig Asano
Senior Legal Counsel, Corporate Finance, BCSC, Elliot Mak, along with Graham Stanley, General Manager, Community Futures Stuart Nechako discuss crowdfunding regulations BC from a regulator's perspective and a practical portal operators perspective.
A presentation on private placements in India. If you like my presentation, please share. And I would like to know your thoughts, so comment and let me know.
Describes the procedure of issuing securities. A company must adhere to certain rules and regulations that it must follow if it wants to issue bonds/securities. These are discussed
VanFUNDING 2016: Mechanics of Securities Crowdfunding RegulationsCraig Asano
Senior Legal Counsel, Corporate Finance, BCSC, Elliot Mak, along with Graham Stanley, General Manager, Community Futures Stuart Nechako discuss crowdfunding regulations BC from a regulator's perspective and a practical portal operators perspective.
A presentation on private placements in India. If you like my presentation, please share. And I would like to know your thoughts, so comment and let me know.
Describes the procedure of issuing securities. A company must adhere to certain rules and regulations that it must follow if it wants to issue bonds/securities. These are discussed
Regulation of Equity Crowdfunding in CanadaPemo Theodore
Presentation given by Brian Koscak, Partner, Cassels Brock & Blackwell LLP; Co-Chair, Equity Crowdfunding Alliance of Canada; Chair, Private Capital Markets Association of Canada @SV Crowdfunding Conference April 3, 2014
Angel Investor View on ASEAN Common Fund for StartupGoutama Bachtiar
Profiled at ASEAN Workshop on SME Business and Technology Incubator', hosted by ASEAN Secretariat along with Indonesia Ministry of Cooperatives and SME in June 2013.
Financial terms can be intimidating. The financial industry can even seem to have its own language designed to keep the average person confused. But if you understand the terminology, you'll gain the confidence you need to make good, informed decisions. In this small report, you’ll find some of the most common financial terms and acronyms used in the world of banking, mutual funds, stocks, and real estate transactions.
Although you may need to allow a little time to make sense of all the new terms, they're really not difficult if you dive right in.
Keep this guide handy as you explore the world of investing!
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Presenters will describe and promote participant discussion of a range of research-based strategies for military families and caregivers/teachers to promote effective home-to-school/school-to-school transitions, strategies that promote positive socioemotional or cognitive development prior to, during, and after a transition. These will include how to connect with schools/teachers from a distance, moving, creating routines within transitions. The presentation will include a question and answer session immediately following.
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This event is hosted by the Family Transitions concentration area of the Military Families Learning Network.
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Up and Away: Building Child Language, Social Interactions, and Preliteracy S...milfamln
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Objectives:
1. Name three strategies to help support a child’s growing ability to combine words
2. Describe the importance of social interactions during the preschool years and how to support turn-taking and other early social skills
3. Learn three early literacy strategies to use in supporting young children’s readiness for school
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Three ways parents overindulge
Tools to reduce overindulgence (The Test of Four)
Online course offerings
Employment Resources for Military Familiesmilfamln
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Coconut oil is all the rage these days to benefit your health. It has been rumored to help with heart disease, thyroid problems, slow aging, and protect against illnesses such as Alzheimer’s, arthritis, diabetes and even weight loss. But what is the truth about coconut oil? Tune into this webinar to learn fact from fiction about this popular oil.
Learning Objectives
The participant will be able to discuss the composition of coconut oil and the metabolism of its triglycerides.
The participant will be able to explain the science behind the purported benefits of coconut oil for weight loss and blood lipid levels.
The participant will be able to assist clients in understanding the inclusion of coconut oil in the context of a healthy dietary pattern.
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Objectives:
1. Describe the importance of responding to child communication as a strategy
2. Discover at least three ways to create opportunities for children to communicate during everyday routines
3. Learn how to coach families to embed strategies during their daily routines and activities
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Entrepreneurial Opportunities for Military Familiesmilfamln
This 90-minute webinar will examine the resources and programs offered by the Small Business Administration that can benefit military service members and spouses transitioning from the military into business-owning ventures. Jaime Wood from the Small Business Administration will give an overview of the programs offered nationally by the SBA to support entrepreneurial efforts of veterans and military spouses, including the Boots to Business initiative, programs offered by the Office of Veteran's Business Development, the Veteran Women Igniting the Spirit of Entrepreneurship (V-Wise), and Entrepreneurial Development programs for service disabled veterans.
Watch recording and learn more: https://learn.extension.org/events/3265
Getting to Know You: Early Communication Development from Birth to Three Yearsmilfamln
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Objectives:
*Identify at least 12 early developing gestures that are used by young children to share and gather information
*Describe early sound development milestones and identify red flags for atypical speech sound development
*Provide strategies for explaining how vocabulary and word combinations develop to families
*Discuss similarities and differences in communication development for Dual Language Learners
Income Tax Tips for PFMs Working with Military Familiesmilfamln
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Beyond the Shape Sorter: Playful Interactions that Promote Strong Academic & ...milfamln
This webinar is hosted by the MFLN Family Development Early Intervention concentration area. For full information and the archived recording, visited https://learn.extension.org/events/2943. Questions about the MFLN? Email us at MilFamLN@gmail.com
This is a presentation by Dada Robert in a Your Skill Boost masterclass organised by the Excellence Foundation for South Sudan (EFSS) on Saturday, the 25th and Sunday, the 26th of May 2024.
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How to Read a Mutual Fund Prospectus
1. Welcome to the
Military Families Learning Network Webinar
How to Read a Mutual Fund Prospectus
Please share your email address with us!
We’d like to send you a link to this webinar’s recording and resources,
and notifications for future webinars.
Provide feedback and earn CEU Credit with one link:
We will provide this link at the end of the webinar
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
2. Welcome to the
Military Families Learning Network
Research and evidenced-based
professional development
through engaged online communities.
eXtension.org/militaryfamilies
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.
3. Connect with the Personal
Finance Team
Facebook: PersonalFinance4PFMs
Twitter: #MFLNPF
5. Today’s Speaker
Dr. Michael Gutter is an Associate Professor,
Interim FCS Program Leader, and Financial
Management State Specialist for the
Department of Family, Youth, and Community
Sciences, in the Institute for Food and
Agricultural Sciences at the University of
Florida. He is also the Principal Investigator
for the Personal Finance Concentration Area
of the Military Families Learning Network. The
common theme that connects Gutter's
Research, Teaching and Outreach is helping
households achieve financial security. He
regularly tweets on personal finance topics
under @mikegutter on Twitter.
6. Mutual Funds: A Handy
Financial Tool for Building
Wealth
Dr. Michael S. Gutter
Interim FCS Program Leader
University of Florida IFAS Extension
msgutter@ufl.edu
@mikegutter
7. Workshop Objectives
• Learn about different types of mutual funds
• Learn about the different ways in which
military families may need or access funds or
similar investments
• Learn how to compare funds
• Activity involving matching funds to family’s
objectives
8. Mutual Funds
• May fit into your investment plan
• Provide diversification
• Understand your personal risk tolerance
• Know your objectives
• Research before purchasing any
investment vehicle
9. Open-end Investment
Companies - Mutual Funds
• Have a variable capital structure
• Shares are bought and sold from the
mutual fund
• Shares cannot sell for a discount from
NAV
10. Closed-end Investment
Companies
• Have a fixed capital structure
• Shares are bought and sold in the
secondary markets
• Shares may sell for a premium or
discount from NAV
• Tendency for shares to sell at a
discount from NAV
11. What is a Mutual Fund?
• An investment company pools the assets
of many investors to purchase securities
• Funds can be invested in stocks, bonds,
money market instruments, real estate,
precious metals
• Investors buy shares in the fund
• Provides diversification to reduce risk
12. Poll Question:
People Can Own Mutual Funds
1. Through employer sponsored
retirement plans
2. 529 plans
3. Individual Retirement Accounts
4. Annuities
5. All of the above
6. None of the above
13. Advantages of Mutual Funds
• Diversification
– Cost effective way to achieve diversification
• Affordability
– Can often get started with small amounts
– Allows for regular small deposits
• Liquidity
– Can sell shares back to the investment company
• Professional Management
– Professionals make decisions
– Advantages and disadvantages
14. Word on Diversification
• Time Value of Money
• Risk and Return
• Diversification
– Thus the goal of diversification can be
thought of as
– The reduction/elimination of idiosyncratic
risk within a portfolio
15. Disadvantages of Mutual Funds
• Funds held outside of a tax advantaged plan
– Taxes on capital gain & dividend distributions
• Even when you reinvest distributions
• Lack of control of exactly which securities are
purchased
– Decided by fund manager
– Index being tracked
• Risk
– No guaranteed return
– Market fluctuation
16. How Can You Profit?
• Dividend Distributions
• Capital Gain Distributions
• Net Asset Value increases and you
redeem (sell) the shares
• You can reinvest:
– Dividends
– Capital gains distributions
17. Prospectus
• Document that all companies offering
new securities for public sale must file
with the SEC.
• It spells out in detail the financial
position of the offering company, what
the new funds will be used for, the
qualifications of the corporate officers,
risk factors, nature of competition, and
any other material information.
18. Name of the Mutual Fund
• Prospectus must be updated at least
annually
• May be a “consolidated” prospectus for
several funds from the same fund family
– Example: Vanguard U.S. Stock Index Funds
19. Required Cover Statements
• Standardized “CYA” language
– Clearly states in bold print that there is no
government approval of the fund
– To state that there is approval is a crime
• Tells investor about the availability of
– Statement of Additional Information (SAI)
– Annual and semi-annual reports to
shareholders
20. Statement of Fund Investment
Objective
• Varies with the type of mutual fund
• Almost 30 different objectives (ICI)
• Three PRIMARY Objectives:
– Stability (preservation of principal)
• Example: Money market mutual funds
– Growth (increased value of principal over time)
• Examples: Stock mutual funds, stock index funds
– Income (generating a stream of payments)
• Example: Bond mutual funds
21. Example of a Mutual Fund
Objective
The fund invests with the objective of
capital growth. Although income is
considered in the selection of
securities, the Fund is not designed for
investors seeking primarily income
rather than capital appreciation.
22. Fees and Expenses
• Shareholder Fees
– Charged to an individual investor’s account
– Examples: sales load, redemption fee, account
maintenance fee, exchange fee
• Annual Fund Operating Expenses
– Paid by mutual fund as a % of assets
– Examples: management fee, 12b-1 fee, other
expenses
• Standardized hypothetical example
– 1, 3, 5, and 10 years of fees on $10,000
23. Financial Highlights Table
• NAV, beginning of period
• NAV, end of period
• Net assets, end of period
• Ratio: total expenses & average net assets
• Number of outstanding shares
• Total return for period
• Turnover rate
24. Net Asset Value
• A share in a fund is purchased at NAV
(plus sales charges & fees)
• Per share Net Asset Value=
Total Assets – Total Liabilities
Number of Shares Outstanding
25. Sources of Return to the
Investor
• Income distributed in the form of
dividends
• Capital gains distributions
• Appreciation in the NAV
• Change in the discount/premium
26. Investment Policies
The “personality” of a fund
– What it will do and won’t do
– Securities purchased to meet fund objective
– Investment quality of securities
– Use of speculative practices (e.g., selling on margin,
futures contracts, derivatives)
– Limits on % of fund assets in one industry
27. Investment Risks
• Describes principal risks associated with
investing in a particular fund
– Example: currency risk (global fund)
• Describes risks associated with a type of
investment
– Example: interest rate risk on bond funds
• Describes range of quality ratings allowed
– Example: low rated bonds in junk bond funds
28. Investment Advisor Information
• Name of advisor (e.g., The Vanguard Group)
• Beginning of operations (e.g., since 1975)
• Amount of assets under management (e.g., $592
billion in assets)
• Services provided by investment advisor
• compensation to investment advisor as a % of
assets
• Special arrangements such as bonuses
29. Fund Distributions and Taxes
• Frequency of fund distributions
– Dividends
– Capital gains
• Sale or exchange of shares is a “taxable
event”
• Procedure for reinvesting distributions
30. How to Purchase Shares
• Method(s) of Purchase
– Online, by check, by exchange, through a
broker/sales agent
• Price of Purchase
– NAV or NAV plus a sales load
– Price breaks for large purchases
• Minimum Purchase Amounts
– Minimum initial deposit and later deposits
– Minimums for IRAs and automatic
purchase plans
31. How to Redeem Shares
• Methods by which shares can be
redeemed (e.g., check-writing, telephone
request, written request, wire transfers)
• Description of redemption price
– Example: “You redeem shares at the fund’s
next-determined NAV after [company]
receives your redemption request.”
• Process to exchange fund shares
32. Profile Prospectuses
• Short and sweet
– One double-sided page
• Key pieces of information only
– Short paragraphs
– Sometimes in “Q&A” format
• Should still request full prospectus
33. Five Key Factors to Scrutinize
• Fund objective
• Fees and expenses (for type of fund)
• Historical performance
• Investment policies relative to personal
risk tolerance
• Minimum initial and subsequent deposits
34. The Load Fee
• Charged to investor when the shares
are purchased
• Compensates the sales person (i.e., is
analogous to brokerage commissions
for buying securities)
• Varies with dollar amount purchased
• Load expenses mean investors pay a
premium over the fund's NAV
35. The Load Fee
Front-End
• Charging the load
(commission) on a mutual
fund at the time of
purchase
Contingent-Deferred
• AKA Band-End Load:
fees assessed on a
mutual fund account at
redemption
• % percentage of net
asset value; generally
declines over time
36. Other Fees and Expenses
• Early withdrawal fees (or exit fees
• Management fees
• Operating expenses
• Exchange Fees
– a fee charged by many no-load fund
families when moving money from one
fund to another within the family
– Discourages investors from using the funds
as trading accounts.
37. Sales Charges vs. Management
Expenses
• The longer you hold an investment:
– Less effect of sales fee (load)
– Greater the effect of management
expenses
• Your timeline can affect your choice
38. Total Annual Fund Operating
Expenses
• Expense ratio
– Let’s you know how much of the funds
assets are going towards annual expenses
– Expressed as a percentage
• Expense Ratio = annual expenses ÷ fund
assets
• Does not include
– Loads (sales commissions)
– Transaction Fees
39. Expense Ratios
• Good way to compare the ongoing fees
of different mutual fund companies
• Example:
– Company A expense ratio= .75
– Company B = 1.5
40. Expense Ratios
• Compare ratios for similar types of fund
Example:
– Domestic to domestic
– International to international
– Index fund to index fund
41. Classes of Shares
• Class A (front end loads)
– Pay commission when you buy the fund
• Class B (back end loads)
– Pay commission if you sell before the
specified period ends. AKA Contingent
Deferred Sales Charges
• Class C
– Carry a level load, collected every year
42. No Load Funds
• No commission charged
• Purchase directly from the investment
company
• Can still charge other fees
– 12b-1
– Purchase fees
– Exchange fees
44. Redeem Shares:
Will you have a capital gain?
• $$$ = (NAV x # shares) – fees, commission
– Capital Gain
– Capital Loss
45. Taxes
• Earnings in tax advantaged plans grow tax
free
– Retirement plans, 529 plans
• Outside of those plans, taxes paid on
distributions even if reinvested
– Long –term capital gains tax rate is less than
tax rate for ordinary income
– Capital losses can be used to offset capital
gains
46. Taxes
• When you sell you have a capital gain,
loss or break even
– Tax liability depends on amount gained or
lost
• Amount of Capital Gain/Loss
Sales Price – Cost Basis
• Cost basis is purchase price (includes
any fees, commissions, etc. )
47. • Turnover
– the relative frequency of trading securities
within a mutual fund or other portfolio
• Turnover ratio
– for mutual funds, annual sales divided by
the average monthly net assets (excluding
securities with less than one-year
maturities)
48. Family of funds:
group of mutual funds owned
and marketed by the same
company
So we know how they work, what they cost, how we measure it
HOW DO WE DECIDE AMONGST
THE THOUSANDS OF FUNDS?
49. Purchasing Mutual Funds
• Broker
– Full Service
– Online
• Directly from the investment fund
company
• Through employer sponsored plan
50. Fund Objectives
• Each fund will have a specific objective
• Some general examples
– Growth
– Income producing (dividend paying)
– Social responsibility
– Track an index
51. Basics
• Money market mutual fund
• Bond fund
• Common stock fund
52. Differences in Risk Orientation of
Common Stock Funds
• Growth funds: stress appreciation potential; accept
considerable risk
• Income funds: focus on stocks that pay high dividends;
provide low risk and modest growth
• Blend funds: place more emphasis on stability than growth
funds do but less than income funds do; seek growth as
well as stability
53. Specialized Funds
• Sector funds
• Bond funds
• Index funds
• Tax-exempt bond funds
• Single country or regional funds
54. Investment Styles
• Index Funds
• Large cap
• Mid-size cap
• Small cap
• Growth
• Value
• Market Capitalization - Total market value of a company’s stock
55. • Specialty fund: designed for investors who seek
special investment opportunities. One such fund
might invest in precious metals, a second might focus
on commodities or commodity trading, and a third
might engage in option trading.
• Hedge funds: typically invest in derivatives, sell
short, use leverage, and invest internationally. take
substantial risks, to try for large rewards. Allow only
“qualified investors” to participate.
• Blind pool: the precise purposes of the venture are
not revealed to the pool of investors until later
56. • International funds: specializes in investments
outside of the United States and helps the investor to
further diversify his or her portfolio. International
funds may specialize in specific countries or regions,
such as the Pacific Rim.
• Global fund: invests in the United States and in
foreign markets. The general philosophy is that we
live in a global economy and that capital should flow
toward those regions that offer optimal risk-return
combinations.
57. The Composite Performance
Measures: The Treynor Index
• Standardizes the return in excess of the risk-free return
by the portfolio's beta
• Useful for comparing two managers on a risk adjusted
basis but does not compare to market
– Can calculate for the market and then use for
comparison
• Uses the portfolio's volatility as the measure of risk
• Assumes that the portfolio is well diversified, so the beta
(which measures systematic risk only) is the appropriate
measure of risk
58. The Composite Performance
Measures: The Sharpe Index
• Standardizes the return in excess of the risk-free return by
the portfolio's standard deviation
• Uses the portfolio's variability as the measure of risk
• Does not assume that the portfolio is well diversified
• This is because it uses Standard deviation (which
measures total risk) is the appropriate measure of risk
• Useful for comparing two managers on a risk adjusted
basis but does not compare to market
– Can calculate for the market and then use for
comparison
59. Point of clarification
• Variability
– Compare one year’s return with average
for the portfolio or security
• Volatility
– Compares return relative to something else
• Like benchmark
60. The Benchmark Problem
• The comparisons use an aggregate
measure of the market
• The composition of many portfolios are
not comparable to the market
• Examples would be specialized funds or
global funds
• Treynor and Jensen use Beta but Beta
can be biased
62. Disadvantages of Mutual
Funds
• Management fees, expenses, and loads for
load funds reduce their returns.
• Large investors, such as mutual funds,
usually adversely affect the market when
they trade.
• Institutions usually restrict their analysis to a
small percentage of traded stocks.
64. Okay let’s see what we
learned…
• We are going to consider a unique case
on the next slide. We will then go online
and access one of our fund screeners.
• What fund did you pick and why?
65. Selecting Your Own Funds
• Your financial goals
– Growth, income, combination
– Asset allocation
• Available options
– Employer sponsored plan
– Individual plans
• Risk: Safety of investment and Individual comfort level
• Minimum investment to get started
• Timeline
• Liquidity
– Can you access when needed (and what will be the cost)
• Tax consequences
66. Activity
• Meet Marco (28) and Sheila (27). Marco is
stationed at Eglin Air Force Base in Florida.
His wife is an Extension agent. They recently
decided to open a Roth IRA. They have no
plans for this money prior to retirement. They
are looking for growth in their investment over
the long run. They can afford to invest
between $2000 and $5000 per year. If you
were them, what fund might you choose?
69. Start a File For Every Fund That
You Own
• Most recent prospectus
• Copy of original application form
• Annual account statements
• Periodic statements
• Articles about the fund, manager, etc
70. Sources & Resources
• Montana State University
– http://www.msuextension.org/solidfinances/pastrecordi
ngs.html
• Securities and Exchange Commission
– http://www.sec.gov/investor/pubs/inwsmf.htm
• Investment Company Institute
– www.ici.org
• Financial Industry Regulatory Authority (FINRA)
– http://www.finra.org/Investors/SmartInvesting/Choosing
Investments/MutualFunds/
• Dr. Michael Gutter, 2011 webinar
72. Next Personal Finance Webinar
Current Personal Finance Topics for
Financial Practitioners
• Tuesday, November 25, 2014, 11 a.m. ET
• https://learn.extension.org/events/1714
• Speaker: Dr. Barbara O’Neill
• 1.5 CEUs for AFC-credentialed
participants
73. Military Families Learning Network
Find all upcoming and recorded webinars
covering:
Family Development
Military Caregiving
Personal Finance
Network Literacy
http://www.extension.org/62581
This material is based upon work supported by the National Institute of Food and Agriculture, U.S. Department of Agriculture,
and the Office of Family Policy, Children and Youth, U.S. Department of Defense under Award Numbers 2010-48869-20685 and 2012-48755-20306.