http://www.articletrader.com/ Articles at ArticleTrader en-us http://www.articletrader.com/finance/investing/why-you-should-buy-no-load-funds.html http://www.articletrader.com/finance/investing/why-you-should-buy-no-load-funds.html Tue, 27 Jun 2006 00:00:00 -0500 Load is defined as the fee or the commission that an investor pays to a mutual fund at the time of purchasing or redeeming the shares of the mutual fund.

If the commission is charged when the investor buys the shares, it is known as a front-end load. On the other hand if the commission is charged when the investors redeems his shares, it is known as a back-end load.

Certain funds apply back-end loads only if the shares are redeemed within a specific time period after being bought.

The argument for applying loads on mutual fund transactions is that these loads will discourage investors from trading frequently in mutual funds. If the investors quickly move in and out of mutual funds, the funds have to maintain a high cash position to meet these redemptions, which in turn decreases the returns of the funds.
Also frequent trading means the expenses of the mutual funds go up.

There are various arguments against load funds:

-The fees that the mutual funds collect as loads are passed on to the fund brokers. The loads do not provide any incentive for the fund manager for better performance of the funds. In other words, a load fund has no reason why its managers should perform better than those of no-load funds.

-In the last few decades, no difference has been seen in the returns of load and no-load funds (if the loads are not considered.) When the loads are considered, the investors of load funds have actually gained less than the investors of no-load funds.

-When a sales person knows that he is going to get a commission from a load fund, he tends to push the load fund more - even when the load funds are performing poorly as compared to no-load funds.

-Loads are understated by mutual funds. If an investor invests $1000 in a fund with 5% front-end load, the actual investment is only $950. Thus his actual load is $50 in $950 investment - a 5.26% load.

If an investor is already invested in a load fund, it doesn’t make sense to exit now. The load has already been paid for. The hold or sell decision should now only be based on what the investor thinks about the future performance of the fund. In a few funds, the exit load depends on the period for which the fund was held.Check the details of the fund prospectus for more information.

In most cases it is better to avoid load funds; however, investors should keep one thing in mind. Sometimes load funds can be a better choice than no-load funds. For example, an investor has a choice of two classes in a fund - class A and class B. Class A has 3% front-end load and Class B has no load. The investor however misses the fine print, which states that Class B has 1% 12b-1 annual fees.

If the fund will make 10% gains each year, its return in Class A (starting with actual amount invested $970) will be

($970) X (1.10) X (1.10) X (1.10) X (1.10) X (1.10) = $1562

For Class B, the returns will be

($1000) X (1.10) X (0.99) X (1.10) X (0.99) X (1.10) X (0.99) X (1.10) X (0.99) X (1.10) X (0.99) = $1532.

Thus the above example is an exception, where in the long run, the load fund will perform better than the no-load fund (with 12b-1 fees).

The fact is that a no-load fund cannot be considered a true no-load fund, if it charges fees from it's investors in the form of 12b-1 and other fees.



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Sachin A is a freelance writer. To read more interesting articles on mutual
funds and finance visit http://www.financemanual.com

Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/mutual-fund-expenses.html http://www.articletrader.com/finance/investing/mutual-fund-expenses.html Thu, 01 Jun 2006 00:00:00 -0500
The expenses of mutual funds are met from the capital invested in them. The ratio of the expenses associated with the operation of the mutual fund to the total assets of the fund is known as the “expense ratio.” It can vary from as low as 0.25% to 1.5%. In some actively managed funds it may be even 2%. The expense ratio is dependant on one more ratio – “the turnover ratio”.

“The turnover rate” or the turnover ratio of a fund is the percentage of the fund’s portfolio that changes annually. A fund that buys and sells stocks more frequently obviously has higher expenses and thus a higher expense ratio.

The mutual fund expenses have three components:

The Investment Advisory Fee or The Management Fee: This is the money that goes to pay the salaries of the fund managers and other employees of the mutual funds.

Administrative Costs: Administrative costs are the costs associated with the daily activities of the fund. These include stationery costs, costs of maintaining customer help lines and so on.

12b-1 Distribution Fee: The 12b-1 fee is the cost associated with the advertising, marketing and distribution of the mutual fund. This fee is just an additional cost which brings no actual benefit to the investor. It is advisable that an investor avoids funds with high 12b-1 fees.

The law in US puts a limit of 1% of assets as the limit for 12b-1 fees. Also not more than 0.25% of the assets can be paid to brokers as 12b-1 fees.

It is important for the investor to watch the expense ratio of the funds that he has invested in. The expense ratio indicates the amount of money that the fund withdraws from the funds assets every year to meet its expenses. More the expenses of the fund, lower will be the returns to the investor.

However it is also essential to keep the performance of the funds in mind too. A fund may have higher expense ratio, but a better performance can more than compensate higher expenses. For example, a fund having expense ratio 2% and giving 15% returns is better than a fund having 0.5% expense ratio and giving 5% return.

Investors should note: It is not sensible to compare returns of funds in different risk classes. Returns of different classes of funds are dependant on the risks that the fund takes to achieve those returns. An equity fund always carries a greater risk than a debt fund. Similarly an index fund that invests only in relatively stable and thus less risky index stocks, cannot be compared with a fund that invests in small companies whose stocks are volatile and carry greater risk.

Avoiding funds with high expense ratio is a good idea for the new investor. The past performance of a fund may or may not be repeated, but expenses usually do not vary much and will certainly reduce returns in future too.



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Know more about mutual funds at http://www.completeonlinetrading.com


Source: http://www.articletrader.com ]]> http://www.articletrader.com/finance/investing/mutual-funds-an-introduction-and-brief-history.html http://www.articletrader.com/finance/investing/mutual-funds-an-introduction-and-brief-history.html Thu, 11 May 2006 00:00:00 -0500 Each one of us does not have the expertise or the time to build and manage an investment portfolio. There is an excellent alternative available – mutual funds.

A mutual fund is an investment intermediary by which people can pool their money and invest it according to a predetermined objective.

Each investor of the mutual fund gets a share of the pool proportionate to the initial investment that he makes. The capital of the mutual fund is divided into shares or units and investors get a number of units proportionate to their investment.

The investment objective of the mutual fund is always decided beforehand. Mutual funds invest in bonds, stocks, money-market instruments, real estate, commodities or other investments or many times a combination of any of these.

The details regarding the funds’ policies, objectives, charges, services etc are all available in the fund’s prospectus and every investor should go through the prospectus before investing in a mutual fund.

The investment decisions for the pool capital are made by a fund manager (or managers). The fund manager decides what securities are to be bought and in what quantity.

The value of units changes with change in aggregate value of the investments made by the mutual fund.

The value of each share or unit of the mutual fund is called NAV (Net Asset Value).

Different funds have different risk – reward profile. A mutual fund that invests in stocks is a greater risk investment than a mutual fund that invests in government bonds. The value of stocks can go down resulting in a loss for the investor, but money invested in bonds is safe (unless the Government defaults – which is rare.) At the same time the greater risk in stocks also presents an opportunity for higher returns. Stocks can go up to any limit, but returns from government bonds are limited to the interest rate offered by the government.

History of Mutual Funds:

The first “pooling of money” for investments was done in 1774. After the 1772-1773 financial crisis, a Dutch merchant Adriaan van Ketwich invited investors to come together to form an investment trust. The goal of the trust was to lower risks involved in investing by providing diversification to the small investors. The funds invested in various European countries such as Austria, Denmark and Spain. The investments were mainly in bonds and equity formed a small portion. The trust was names Eendragt Maakt Magt, which meant “Unity Creates Strength”.

The fund had many features that attracted investors:

- It had an embedded lottery.
- There was an assured 4% dividend, which was slightly less than the average rates prevalent at that time. Thus the interest income exceeded the required payouts and the difference was converted to a cash reserve.
- The cash reserve was utilized to retire a few shares annually at 10% premium and hence the remaining shares earned a higher interest. Thus the cash reserve kept increasing over time – further accelerating share redemption.
- The trust was to be dissolved at the end of 25 years and the capital was to be divided among the remaining investors.

However a war with England led to many bonds defaulting. Due to the decrease in investment income, share redemption was suspended in 1782 and later the interest payments were lowered too. The fund was no longer attractive for investors and faded away.

After evolving in Europe for a few years, the idea of mutual funds reached the US at the end if nineteenth century. In the year 1893, the first closed-end fund was formed. It was named the “The Boston Personal Property Trust.”

The Alexander Fund in Philadelphia was the first step towards open-end funds. It was established in 1907 and had new issues every six months. Investors were allowed to make redemptions.

The first true open-end fund was the Massachusetts Investors’ Trust of Boston. Formed in the year 1924, it went public in 1928. 1928 also saw the emergence of first balanced fund – The Wellington Fund that invested in both stocks and bonds.

The concept of Index based funds was given by William Fouse and John McQuown of the Wells Fargo Bank in 1971. Based on their concept, John Bogle launched the first retail Index Fund in 1976. It was called the First Index Investment Trust. It is now known as the Vanguard 500 Index Fund. It crossed 100 billion dollars in assets in November 2000 and became the World’s largest fund.

Today mutual funds have come a long way. Nearly one in two households in the US invests in mutual funds. The popularity of mutual funds is also soaring in developing economies like India. They have become the preferred investment route for many investors, who value the unique combination of diversification, low costs and simplicity provided by the funds.



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Know more about mutual funds at http://www.completeonlinetrading.com


Source: http://www.articletrader.com ]]> http://www.articletrader.com/health/avian-influenza-bird-flu-faq.html http://www.articletrader.com/health/avian-influenza-bird-flu-faq.html Sun, 30 Apr 2006 00:00:00 -0500 As more and more cases of bird flu are reported, the world faces an immediate threat of a deadly pandemic. Pandemics (Global Disease Outbreaks) are known to be like flash floods. They start abruptly, spread fast and cause a lot of damage all over the world.

A few facts that everyone should know:

What is Avian Influenza?

As the name suggests, avian influenza refers to the infection caused by avian (bird) influenza (flu) viruses. These viruses are commonly found in intestines of wild birds and these birds can carry the viruses without getting sick. However the viruses can be pathogenic to domesticated birds like chickens, ducks and turkeys. Domesticated birds become infected through exposure to other birds or through surfaces contaminated by secretions and faeces of the infected birds.

These viruses are classified as Low Pathogenicity and High Pathogenicity. Most strains of Avian Influenza come under Low Pathogenicity Avian Influenza (LPAI) Group and produce mild symptoms in the infected birds. Common symptoms are ruffled feathers, decreased food appetite, decreased egg production, sneezing and coughing. Many times LPAI may go undetected.

High Pathogenicity Avian Influenza (HPAI) has more severe symptoms which include sudden death, loss of energy and appetite, decreased egg production, respiratory problems, facial oedema (swelling), poorly formed eggs and diarrhoea. HPAI can reach a mortality rate of nearly 100%.

What Is H5N1 strain of Bird Flu?

All flu viruses are classified as type A, B or C depending on their structural arrangement. Type A is responsible for lethal pandemics and is found in both animals and humans. Type B causes local outbreaks of flu. Type C is the most stable of the three and infected people show only mild symptoms of flu. Type B and C are usually found only in humans. Type B and C are more stable than type A and are not classified according to their subtypes.

Influenza viruses of type A are divided into subtypes and the naming is done on the basis of two proteins (antigens) found on their surface - Hemagglutinin (HA) and Neuraminidase (NA). Sixteen types of HA and nine types of NA exist. Thus a total 144 combinations are possible.

Thus H5N1 is a type A virus and gets its name from HA 5 protein and NA 1 protein present on its surface.

How Do Type A Viruses Cause A Pandemic?

Type A viruses are further classified into strains. These strains can continuously evolve into different strains. Their ability to exchange genetic material with other viruses and create new influenza viruses makes them unpredictable and difficult to fight with. Humans have to develop new immunity (antibodies) every time new strains are created.

Viruses cannot repair genetic damage, small changes known as "Antigen Drift", are continuously creating new strains of viruses. However when genetic material from Type A viruses from different species - say a bird and a human, comes together and merges, an entirely new strain is created. This is known as "Antigen Shift" Humans have no immunity to such a strain and the strain can spread rapidly causing a Pandemic.

How Is The Virus Transmitted To Humans From Birds?

Usually Avian Influenza viruses do not infect humans. Migratory birds act as carriers of these viruses and do not get affected by them. These birds then come in contact with domesticated birds such as chickens and turkeys and spread the infection to them. Domesticated birds may get the virus from contact with contaminated surfaces too. Once a virus infects domesticated birds, it can cause severe epidemic among the birds. Humans come in contact with infected birds or contaminated surfaces and pick up the virus.

In the human body, this avian flu virus then undergoes an antigenic shift, combines with genetic material of a human strain of influenza virus and creates an entirely new strain of virus against which humans have little or no immunity. These genetic reassortments may also take place is the body of a third species (susceptible to both avian and human viruses) like the pig, where an avian influenza A virus and human influenza virus mix their genetic information and produce a new virus which might be able to infect humans.

Why is H5N1 dangerous?

The first reported cases of H5N1 infections were detected in geese in 1997 in Southern China. A total of 18 human infections were reported and six of them succumbed to it. The infection spread quickly to poultry in Hong Kong. At that time a million and half chickens were culled in Hong Kong to keep the virus under control. The virus disappeared for a few years, but resurfaced in 2002 in Hong Kong again. Since then it has killed millions of birds in Asia and many cases of human infections have been reported.

The persistence of this H5N1 strain of virus is a great concern for humans. Although the virus does not spread from birds to humans easily, the severity of the infection of H5N1 in humans is frightening. The virus has killed every second person infected by it. These cases were reported in perfectly healthy individuals who had no past history of infections. However the greater concern for the world is the POSSIBILITY THAT THE VIRUS MAY MUTATE (UNDERGO ANTIGENIC SHIFT) AND CREATE A FORM THAT MAY SPREAD FROM HUMAN TO HUMAN. Such a strain of virus may result in a pandemic, killing millions of people worldwide.

Is Consumption Of Poultry Birds Safe?

Yes, it is safe to consume THOROUGHLY COOKED poultry products. The H5N1 virus is sensitive to heat and gets destroyed by normal cooking temperatures of 70- 100 degree Celsius. If meat from poultry birds and eggs are cooked properly, the virus will be destroyed. Just make sure that no part of the meat remains raw or uncooked.

How Big Is The Risk Of A Pandemic Breaking Out?

The world had to face a Bird Flu Pandemic, thrice in the twentieth century. In 1918-1919, "Spanish Flu" killed anywhere between 20 million to 50 million people (exact figures not known), including half a million in the United States alone. The "Asian flu" in 1957-58 killed 70,000 in the United States and in 1968-1969, the "Hong Kong flu" killed 34,000 in the USA.

Currently the risk of H5N1 strain leading to a Pandemic is high. The virus is spreading fast to new areas and the efforts made to curtail it have proved inadequate.

Domestic ducks have now become a "reservoir" for the virus. They are acting like a carrier for the virus - their bodies carry the virus without showing signs of any infection. Infected ducks then release large quantities of the virus in pathogenic form in their excretions spreading the virus to other birds or humans. This has made detection of the virus difficult especially in rural areas.

According to health experts, the virus has already met the first two prerequisites for starting a pandemic. First it has attained a form, for which humans have no inbuilt immunity; and second, it has proved pathogenic enough to cause serious illness and death in humans.

The present risk of a pandemic is very high. The only factor that has prevented a pandemic so far is that the virus has not mutated into a form that would allow it to transmit efficiently from one human to another. Once such a genetic change takes place for the virus, a pandemic will be inevitable. The first signs of such a reassortment will be presence of the clusters of patients with flu symptoms, closely related - both in time and space. This would be a clear indication of virus having the ability to transmit from human-to-human.

Currently no vaccine has been developed for fighting H5N1 strain. Simultaneous work is being done in many countries for developing a vaccine, but no success has been achieved. The exact virus that may cause the pandemic cannot be predetermined. Thus mass production of vaccine before the pandemic starts is ruled out. The worldwide manufacturing capacity is inadequate to match the sudden demand surge during a pandemic. The best that scientists can do is to carry out a study and determine the smallest amount of antigen per dose that will provide sufficient protection and thus maximise the number of vaccines produced.

What Are The Precautions Necessary To Prevent A Pandemic?

The logical first step is to control the disease from spreading among birds, but this seems a difficult task now. Bird Flu has become a bird epidemic in many parts of Asia and is spreading fast.

The Next step is to prevent the disease from getting passed on to humans. People who come in close contact with birds (like poultry farmers) are advised to keep a close watch on the health of birds, notify any sort of sickness in birds to the health authorities and avoid direct contact with sick birds in all cases. (Ducks have become a reservoir for the virus and may not exhibit signs of sickness even if they are carrying the virus.)

In case the flu becomes a pandemic, most countries of the world will be affected. In such a scenario, the best preventive measures would be personal hygiene, avoiding crowded places and staying away from raw meat and eggs.

A flu shot does not prevent bird flu, but it can protect a person from other forms of flu and avoid complications. Persons above 65 years of age, children, health services workers, people with chronic respiratory disorders, travellers to flu affected countries and pregnant women may consult a doctor regarding flu vaccination.

What Are The Symptoms In Humans and Treatment Options For Bird Flu?

A person infected by bird flu may have all symptoms of common flu like fever, persistent cough, sore throat and body ache. Moreover, there is a high risk of complications such as pneumonia, bronchitis, eye and ear infections and severe breathing problems.

Presently four drugs are used to combat influenza.

The most effective drugs known for seasonal flu are Oseltamivir (commercial name Tamiflu) and Zanamavir (Commercial name Relenza). Both of these are known to reduce severity and duration of seasonal flu, but they may prove ineffective if the virus is allowed to stay in the body for too long. Health professionals advise that TREATMENT OF FLU WITH THESE DRUGS SHOULD START WITHIN 48 HOURS OF FIRST APPEARANCE OF FLU SYMPTOMS.

Oseltamivir and Zanamavir fall in the Neuraminidase inhibitors class. The surface protein Neuraminidase breaks bonds between new viruses and infected cells. By blocking the activity of Neuraminidase, these two drugs prevent the new viruses from being released.

Another class of drugs - the M2 inhibitors is also available, but viruses develop resistance to these drugs quickly and thus these drugs may prove ineffective in controlling pandemics. Amantadine and Rimantadine are two drugs from this class. These drugs inhibit the activity of M2 protein, which forms a channel in membranes of viruses and thereby preventing the viruses from replicating.

One should consult a doctor before taking any of these drugs as THESE DRUGS ARE KNOWN TO HAVE SIDE EFFECTS IN SOME CASES. For example, Zanamavir is not recommended to people having chronic respiratory diseases such as asthma.




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Sachin A. is a Freelance Writer and specializes in articles that require extensive research. Check out his work at http://www.rightarticle.com

Source: http://www.articletrader.com ]]> http://www.articletrader.com/business/sales/effective-negotiating-the-key-to-sales-success.html http://www.articletrader.com/business/sales/effective-negotiating-the-key-to-sales-success.html Sun, 30 Apr 2006 00:00:00 -0500
Focus On The Customer - Show Him The Money:

The customer is not bothered about how badly you need to make the sale to meet your monthly target. He is more bothered about fulfillment of his needs and getting value for his money.

Talk about the customer's benefit. Don't tell your customer about the latest technology in the car's engine - tell him how this new engine saves him fuel and time.

Know Your Competition:

Knowing your product is not enough. You must know what your competition is offering. You don't want to end up staring at the customer, when he says your competitors are 20% cheaper. Have your answers ready. Give him valid reasons for your higher price.

Don't Waste Your Time With People Who Don't Matter:

When dealing with an organization, learn to prioritize. Don't waste your time explaining the secretary why your power tools are good. Save your time and energy for the decision maker. Try to get an appointment with "the boss". If you can't get one immediately, try for a later one, else move on. The secretary is not going to buy your tools.

Exploit The Copycat Mentality:

Humans have a mentality to copy what others are doing successfully. If a person's competitor or acquaintance is using a product, he may be tempted to use the product too. Keep your references ready and tell him how others have greatly benefited from your product or service.

Get Them To Agree:

When a person agrees to something you are saying, he subconsciously creates a positive frame of mind towards your offer.
Getting the other person to say "Yes" on various occasions brings both of you on the same side - with the same goal.

Your Negotiating Strength Lies In Your Uniqueness:

If it is easy to find someone providing the same service or product that you provide, your negotiating potential is reduced. The more unique your offer, the greater negotiating powers you have. Always make a list of points which differentiate you from your rivals. Sometimes people buy things just because they are different from what most other people are using.

Use Time To Your Advantage:

Every one of us has been to a stock clearance sale. When the merchant runs out of time to sell his stock, his loses his pricing power.

Customers use this tactic on sellers and give a deadline to make a decision on price and terms. The person who is short of time is always at a disadvantage. Never allow yourself to be trapped in a "time limit" trap. Even when you are short of time, don't let it be known to the other person.

On the other hand, a person's urgency to get something done can work in your favor. If the other person is in a hurry to get things done, you can be assured that he will be more willing to bend than he would in a normal situation.

A word of caution - never exploit the other person's urgency to such an extent that it makes the deal grossly one sided. You may get what you want one time, but such deals have a negative impact on your reputation and future business. A win-win situation is always desired.

Price Is Not Everything - Terms Matter Too:

Terms of service are as important as the price itself. An example could be the loans and mortgage industry. Companies are able to charge higher interests rates than competitors by allowing flexible repayment options. Companies offering freebies with their products are compensating a higher price with friendlier terms. Create a balance between the price and the terms - when price is your weak point, offset it with better terms.

"The Policy" Tactic:

Since childhood, people are taught that rules are not to be broken. At subconscious level most of the people carry a perception that it is their duty to follow all rules. You will be surprised how easily people give in when they are told that the terms which they expecting are against the company policy. Salespersons always keep a printed price list with themselves. Those few black words printed on a white paper add authority to the salesperson's arguments and send the message that it is not within their power to alter the terms.

Keep Your Last Price For The Last:

Most buyers have a tendency to ask for a lower price than offered. If asked for "the last price", quote something more than the actual "last price" which you are willing to give. It doesn't matter if initially you offer a price 2% lower or 20% lower - buyers will ask for a further lower price in both cases.

The Final Gambit - Say "No":

Risk taking is an essential ingredient of success.

Agreeing to customers' terms all the time weakens your image in the market. Walk out of the deal if it doesn't seem profitable. If the customer gives in to your terms, you win a profitable deal. If you lose the customer, why repent? He wasn't a profitable customer anyway.




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Sachin A. is a freelance article writer and specializes in articles that require extensive research. Check out his work at http://www.rightarticle.com

Source: http://www.articletrader.com ]]>