THE FUND INDUSTRY

Understand How Mutual Funds Work

The Fund Industry gives you an inside look at how mutual funds work – how they invest money, distribute their shares to the public, and provide service to fund shareholders – and why they have become the investment vehicle of choice for investors around the world. The book covers:

  • How mutual funds operate, and how they compare to alternative investment vehicles
  • How to evaluate funds, categorizing them by security type and investment objective
  • How fund managers pick stocks and bonds, make trading decisions, and vote proxies
  • How mutual funds are sold through brokers, banks, insurance agents, retirement plans, and fund supermarkets
  • The roles of the independent directors, transfer agents, and fund accountants
  • The opportunities and challenges of investing and gathering assets internationally

TABLE OF CONTENTS

 

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WHAT PEOPLE ARE SAYING

Simon Johnson

“Don’t sit back and assume that someone else is managing your money properly. I only wish we had such transparent and honest operating instructions for the rest of the financial system.”

Simon Johnson

Professor at MIT Sloan School of Management

Lord Paul Myners

“This book is a must-read for anyone interested in the fund industry in Asia, Europe, and the United States.”

Lord Myners

Former UK Treasury Minister

Mohamed El-Erian

“It’s rare to find so much useful information in a single book. It will greatly enhance your understanding of the fund industry.”

Mohamed El-Erian

CEO and co-CIO of PIMCO

Andrew J. Donohue

“This book should be required reading for all investors. The authors have done a fabulous job in explaining all aspects of mutual funds in a cohesive, reader-friendly work.”

Andrew J. Donohue

Former Director, Division of Investment Management, SEC

 

WHAT YOU WILL LEARN

 

 

1

Mutual Fund Investing

We review the advantages and disadvantages of mutual funds, explain how they operate, and discuss how investors can gather information about potential fund investments. We also explore the different categories of mutual funds and review how investors might choose funds within each.
2

Portfolio Management

We examine how funds manage their investments. We discuss portfolio management in stock, bond and money market funds and then examine how funds implement investment decisions through trading. We conclude with an overview of how mutual funds exercise their responsibilities as substantial stock investors.
3

Selling Funds

This section covers how mutual funds are distributed to investors in the United States. We discuss sales through intermediaries, directly by funds and through retirement plans, examining issues within each channel as well as those affecting all channels. The final chapter in this section reviews the inner workings of exchange-traded funds (ETFs) and hedge funds.
4

Operations & Finance

We explain how the find industry provides customer service and keeps portfolio records. We also review the financial dynamics of mutual fund management companies, examining factors that drive their profitability, and trends in mergers and acquisitions.
5

Internationalization

This section looks at cross-border investing and asset gathering. We take a look at the investment and operational issues faced by U.S. mutual funds investing outside the United States. We examine the special challenges involved in distributing funds across the world and discuss how the European Union has increased cross-border distribution. We end with a survey of the asset management industry in Asia and in the Americas outside of the United States, with a focus on China and Chile.

ABOUT THE AUTHORS

Robert Pozen is a Senior Lecturer at Harvard Business School and a Brookings Fellow. He was previously chairman of MFS Investment management, vice chairman of Fidelity Investments, chairman of the SEC Advisory Committee on improving financial reporting, and a member of the Presidential Commission to Strengthen Social Security.
Theresa Hamacher, CFA, is President of NICSA, the National Investment Company Service Association, and the former chief investment officer for Pioneer Investment Management USA. Previously, she was the chief investment officer for Prudential Mutual Funds. In 1984, she ran the Prudential-Bache (Tax-Managed) Utility Fund.

TABLE OF CONTENTS

 

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