What are the basics of accounting of the mutual fund?

Mutual fund accounting is difficult because it includes many levels of incoming and outgoing investments, as well as government regulation, operating costs and fees. These funds can offer a relatively safe form of investment in more securities for investors who seek maximizing revenue and minimize risk. The accounts include mutual funds deposits of investors and investment dividends on the PLUS side and purchases and expenses of funds on the minus side. Many mutual funds are open, which means that the fund manager can sell an unlimited number of shares. The closed mutual fund sells investors a fixed number of shares through the initial public offer (IPO). The fund administrator usually manages the accounting fund's procedures to supervise the board of directors. Vaiting, which may include stocks, bonds and short -term funds of the money market. Fund administrator makes purchase and selling for a mutual fund and establishes decisions of investment on the goal of the fund that are announced in the prospectusLunar fund. Almost all expenditure on mutual funds are used to operate the fund, including the payment of the fund manager. All fund costs are deducted from total assets, so that mutual funds with high operating costs may have lower revenues than the cost of minimum operating costs.

Each individual investor owns a share in the mutual fund and earnings come from adding dividends and interest, minus fund expenses. A diversified mutual fund can obtain dividends from ownership of shares or interest on bond purchases. With the purpose of the mutual fund, all profits of the fund are evenly distributed between all investors and paid each year. Investors may decide to make dividends directly or reinvest money back to the fund. In both cases, shareholders are responsible for paying taxes from the payment of mutual funds.

Mutual fund accounting is used to determine a net value andktiv (NAV) mutual fund and this number usually changes daily. Vav represents how much share in a particular mutual fund stands at a given time. Fund administrators calculate the values ​​of all securities that the mutual fund owns the number of shares that the fund is unpaid. Potential investors can use NAV to determine that mutual fund offers the best value.