Mutual Fund Investment Flashcards

What is a target-date fund designed for?

Answer: Automatically shifting asset allocation to become more conservative as a goal date nears

Target-date funds gradually rebalance toward conservative assets as the retirement date approaches.

What is a capital gains distribution from a mutual fund?

Answer: A payout of profits from securities the fund sold

Capital gains distributions pass along profits the fund realized from selling holdings.

A sector fund concentrates its investments in what?

Answer: A single industry or sector of the economy

Sector funds focus on one industry, such as technology or healthcare, increasing concentration risk.

What is dollar-cost averaging when investing in mutual funds?

Answer: Investing a fixed amount at regular intervals regardless of price

Dollar-cost averaging invests a set amount regularly, buying more shares when prices are low.

What is the role of a fund's custodian?

Answer: To safeguard the fund's assets and securities

The custodian, typically a bank, holds and protects the fund's assets for safekeeping.

What does a 'no-load' fund mean?

Answer: It charges no sales commission to buy or sell

No-load funds are sold without a sales charge, though they may still have other fees.

Which document reports a mutual fund's holdings and performance periodically?

Answer: The annual or semi-annual report

Funds publish annual and semi-annual reports detailing holdings, performance, and financials.