Understanding Mutual Funds: Your No-Nonsense Everyday Guide

Kathleen H. Brown, a financial consultant, was an associate professor of
Family Studies at the University of Guelph.

Anyone wondering what a mutual fund is, whether to invest in one, or how
to choose one will find this book invaluable. Kelman, in addition to
having broad experience in the investment field, is a specialist in
mutual funds, serving as a consultant to the industry as well as
providing investment advice to individuals. A former investment editor
of the Financial Times of Canada, he explains clearly, in nontechnical
language, basic concepts and practices in a way that even a novice can
understand.

After a brief historical sketch, he carefully explains what a mutual
fund is and how it works. Any confusion between a mutual fund and a
closed-end fund, or between a growth mutual fund and an income mutual
fund, is cleared up.

The book focuses on how to select and buy mutual funds. The first step
is to understand the various types available and to identify the
advantages and disadvantages of each for meeting particular investment
objectives. Once investors have clarified their objectives and have
selected the fund type, they should understand various sales gimmicks
and costs. The mutual fund industry is large, and competition to sell is
intense. There are monthly accumulation plans, withdrawal plans, and
leveraged programs. And there are fees such as acquisition, redemption,
management, and trailer fees—some visible and others less so.

One aspect of choosing a mutual fund is analyzing the widely published
past-performance statistics. Kelman provides detailed information on 100
of the largest funds offered in Canada, selected to represent equity
funds, balanced funds, U.S. equity funds, bond and mortgage funds, and
international funds. He also lists the best-performing funds over
one-year, three-year, five-year, and ten-year periods.

The book ends with a directory that gives the names and addresses of
many mutual funds, and appendices that illustrate rates of return from a
long list of funds.