If you see the letters 'DSC' next to a Canadian mutual fund that you own, you can rest assured that you are getting hosed...'DSC' refers to Deferred Sales Charges or fees that an investor has to pay over and above the actual und's management fee.

A deferred sales charge is a "penalty" that the investor has to pay if and when the investor decides to withdraw his/her money. Often it can be as much 6% of the original amount of the investment.

For instance, take an investor who buys $10,000 of a mutual fund with a deferred sales charge. Let's say, the market as a whole does well over the course of a year but this particular fund loses 10%. Not surprisingly, the investor wishes to withdraw his money due to the fund's poor performance. If the investor withdraws his money, he will be hit with a penalty and his investment will be further depleted upon withdrawal. Assuming a 5% penalty on the original investment, the investor is left with $8,500 or a loss of $1,500.

Interesting enough, while the investor winds up with a loss of 15%, the fund company actually does quite well. First, over the course of the year it earns a management fee. In Canada, the average management fee for mutual funds is 2.5-3.0%. So assuming a fee at the low end of 2.5%, the fund company makes $250. It then makes another $500 from the deferred sales charge.

All in, the fund company makes $750. Not a bad pay day for a fund that just underperformed the market.

Of course, the investor could limit his losses by keeping his funds invested with the mutual fund company. In this way, he would save the $500 in deferred sales charge. That would make the fund company very, very happy. Indeed, the fund companies are counting on it. They know that most investors are unlikely to move their investments out if they are forced to pay a penalty.

It really is quite incredible that the big banks are able to get away with this kind of unethical behaviour. In fact, many funds sold by bank financial advisors fall into this category. Unfortunately, the average investor just does not know where to look for pricing information. It certainly is not well publicized by the fund companies for obvious reasons. And unfortunately, our Canadian government has no interest in exposing the mutual fund industry for what it is, unlike Australia or Britain where mutual funds are much better regulated.

The Deferred Sales Charge is just one more way for the Canadian Mutual Fund companies to keep fees hidden from their customers.

Jeff Kaminker Portfolio Manager, CFA, MBA, P.Eng

Jeff Kaminker is a licensed Portfolio Manager for Frontwater Capital based in Toronto, Ontario.

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Without question, there are some disadvantages with mutual funds. They charge management fees that ultimately cut into annual return figures, they invest the way they feel most appropriate without any consideration given to the investor who pays the manager's fees, they can be narrowly focussed, and a few others that are well publicized in the investment industry.

However, mutual funds offer tremendous advantages for the majority of the population. Three of the most overlooked benefits are discussed here and they point to the very fact that mutual funds are, for the most part, an investor's best option.

1. Mutual funds offer tactical investment management. Although many funds will take a buy and hold approach, the securities they own are part of the overall portfolio for a very specific reason. It is rare that a fund manager will purchase a security that he or she feels is a losing proposition. Instead, securities are purchase for their specific appeal, whether it is short-, mid-, or long-term capital growth, income, or a combination of both.

2. Mutual funds provide expertise in niche areas where the investor lacks sufficient knowledge and skill to take positions in individual securities. With asset mix being such an important, vital part of any investor's long-term success with their investment portfolio, it becomes increasingly important to incorporate niche sectors, whether short-term bonds, high yield investments, small-cap equity, foreign equity, and so on. Almost no investor will have professional-level investment knowledge in every asset class and sub-class, requiring them to seek assistance from other professionals. Rather than relying on a rogue neighbor who dabbles in a specific asset for "fun," enlisting the expertise of a highly (often overly) qualified investment manager makes a great deal of sense for the price they cost (often, minimum investment levels are under $2,500) and you usually pay less than 1.5% in expenses.

3. Mutual funds can have specific or general functions depending on an investor's needs. Whether an investor needs a complete investment solution (such as with a target date balanced fund or portfolio) or something on a more specific level (such as filling a gap in their overall asset mix), a mutual fund exists on the market to fill those gaps, and everything in between.

As shown with these three simple examples, there is a mutual fund available to everyone, regardless of his or her immediate and long-term needs. Of course, other options exist but the closest one will find to a mutual fund alternative is an exchange traded fund, which often will not satisfy the investor's long-term and/or specific need.

--> Ten Small Cap Funds Reviewed during month of May at MutualFundSite.org.

Chris has more than 17 years of financial services expertise. He currently manages a website about Used Pallets at ShippingCrate.org.

Article Source: http://EzineArticles.com/?expert=Chris_Blanchet

Many people invest in the stock market without understanding the basics about selection of stocks and how to make money this way. The Penny Stock Prophet system has been invented to help save the investor from losing money by doing the stock picking for the investor. Read on for a full review.

The idea behind Penny Stock Prophet (PSP) is to analyse the stock market with the purpose of targeting good quality stocks trading at a cheap price. Cheap stocks can advantage the investor more than highly-priced stocks as they have more potential for an increase in value provided the underlying fundamentals are sound. An analytical stock picker such as PSP is designed to sift out the low risk quality companies from the cheap but high risk companies. This should mean consistently good trading.

The main benefit behind this system is its programmed ability to determine the stocks that are about to hit a profitable up-cycle. It is based on a similar system to the top investing or trading houses where tracking of real time market data is used to compare the present with trends of the past. This is a commonly used process because stock market trends are always based on recurring cycles of high and low growth.

By tracking past profitable trends by cheaply priced stocks it is possible to find similar indicators with current real time market data. This can enable a fairly precise estimate of how these same stocks are likely to perform in the short-term future.

I have tried this stock tracking system and found that a purchase of cheap stocks trading around 15 to 18 cents have in most cases generated significant capital gains of between 20 and 80 cents a share. Obviously some stocks have done better than others and some have failed to make money but a 75 percent success rate has been impressive.

Another benefit of PSP is that the package comes with a recommended online broker to work in with you the investor. While you naturally need to understand that stock market investing contains risk it is also the best way to make profits quickly on an investment and it is far easier to buy in and out quickly by making a profit than the housing market for example. In fact, many people generate an ongoing income by wisely using this type of system for regular stock trading.

With a one-time fee of $US97.00 http://app-products-info.webs.com and an 8 week 100% money back guarantee this software program is definitely worth trying as a valuable stock market investing tool.

I have a background in business as well as having worked for a boss in various employment from politics to the civil service. I am currently involved in a consultancy where I advise on business start-ups in the renewable energy and building sectors.

Article Source: http://EzineArticles.com/?expert=Anthony_Parker

When you use Stock Investment Software you will get recommendations on which stocks to buy. The next thing you need to know is how to place your trade. Well you will need a stock broker. Making that choice can become confusing. You see their advertisements every few minutes on TV. If you start to check them all out you can get very confused.

One of the things is they offer is premium services. Stock Charts, Stock Patterns, Reviews, Analyst opinions, Stock Patterns etc.

Guess who pays for it. If you bought Stock Investment Software all this work has been done for you. So you have to ask yourself do I need all this? All you need is a reliable stock broker to place your trade. You will find that one of the prime considerations for you is Price. Because you pay when you buy the stock and you pay when you sell it.

Many people fail because of Broker Fees they pay. While when you see the advertised price for example $10.99 a trade verses $5.00 a trade it does not seem significant. But it is. Say you buy shares at $1.00 per share, your cost is $100. Depending on the stock broker you use your fess are 5.00% 0r 10.99%. Today with the unpredictable future people are not buying stock and holding it forever. They trade often. Many are day traders. The more trades the higher the broker fees.

It is wise to play the stock market with Stock Investment Software. But keep your costs down, do not give a large chuck of you profits to the Stock Broker. Watch you Stock Broker fees. Here is another factor you need to consider. When you buy 100 share if you use the $5.00 Stock Broker your fess were 5%, but what percentage would it be if you bought 1000 shares--.005%. So what you should do is never buy or sell less than 500 shares.

My name is Al Villa. I am not a Stock Broker, Analyst, or some kind of guru. I am just a person that has been on the internet since the beginning. What you read here is from my experience. For a long time I did it the hard way. What I have learned in the school of hard knocks I share with you. You can use this or any article any way you choose as long as you share it in its entirety. You can read all my articles all here: More Stock Information

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