subject: Gaining Insight Into Mutual Funds Of The Last Ten Years [print this page] In recent years mutual fund rates have been dismal. In particular, of the last ten years, four have been in negative territory and four have been in positive territory. The other two years of the decade were positive but underwhelming around 5% annualized. The result is that an investor who put in $1000 has either not gained any return, or even lost it should inflation be accounted for in calculating returns.
It is therefore not surprising that a large amount of investment money has fled from mutual fund equity into other kinds of financial instruments. Some of these are considered below but we offer the reader the usual admonition that all investments suffer from risk and uncertainty and therefore should form a small fraction of what is supposed to be a diversified portfolio.
Checking and savings accounts infrequently benefit from the best possible yields forcing investors to turn to other possibilities. Without a doubt investors will encounter the money market account that are akin to typical bank accounts but provide more promising rates. Which institutions sets up money market accounts? It turns out that the regional branch of a nation-wide bank sets up such accounts. Furthermore, one can start an account on the web by way of virtual banks.
One is advised to be aware that a money market account is not to be confused with a money market fund. The first is the offering of one bank and guarantees an interest rate. The second is a portfolio of money market securities and does not have one interest rate, rather appreciating at varying returns over time.
One kind of fund that is not well-known is the GNMA mutual fund, in contrast to the sister Fannie Mae and Freddie Mac. All three manage to property buyers and profit handsomely from the interest payments. The astute reader will recall in recent years Freddie Mac and Fannie Mae were mauled in the property bubble of late 2000s. However, Ginnie Mae survived largely unhurt and likely is in a vastly superior position. A mutual fund investing in greater than 85% of total assets in GNMA-related securities is called a Ginnie Mae fund.
The day-to-day operations of a government, such as running a police force on the city level, or the city college system functioning on the state level, relies upon loaned money. Temporarily obtaining money at these amounts is carried out via the selling of bonds, essentially guarantees by the government to repay plus interest. People buy into bonds for what up till now has been a very trustworthy promise of return and investment profit.
