If mutual funds distribute all of their capital gains and dividends, why does the NAV increase over time?


Posted March 26th, 2009 by admin 2 Comments »
mutual funds
Intrepyd asked:


If mutual funds use most of the capital gains and dividends of their portfolios to make distributions to investors, why does the fund’s net asset value (NAV) increase over time? It seems that distributing these gains would cause the NAV to remain steady, or to decrease.

How trustworthy are these mutual funds? Are they not gambling with public money without any control?


Posted February 16th, 2009 by admin 4 Comments »
mutual funds
Baby Z asked:


If the mutual funds are not designed to generate better returns for investors, who do not want to mess up with the stock markets, why should the MFs be allowed to collect public money? If their fund managers are there to say, “fund value is down because the market is down,” what credibility rests with them to be placed as fund managers?

Why have stocks and bonds moved in the same direction recently?


Posted February 13th, 2009 by admin 4 Comments »
stocks and bonds
rainfingers asked:


The commentary I’ve read says that stocks have a bad day when investors are afraid that interest rates will go up. But rising interest rates make bonds go down too! Is the historical advice–stocks and bonds move in opposite directions–no longer valid? Or is this just a temporary anomaly?

How does the housing market affect the stock market so much?


Posted January 29th, 2009 by admin 8 Comments »
stock market
Miss Yahoo asked:


I heard that the housing market being low in sales and with the forclousure market crashing, it is affecting investors so much that they are moving money out of equities (stocks) and investing more in safer investments. Thats why the stock market has been down so much in the past week.

How does this happen? I was reading about it, but I didn’t really understand. Are investors pulling out their stocks from big lenders? How exactly does it affect the stock market? I need help understanding it in normal terms that make sense.

Please advise, thank you!!