Which of the following statements regarding the performance of a mutual fund would be permitted under current rules?

By Investopedia AAA
A:

A) Income and safety-oriented investors need look no further than the Muscat GNMA fund. Since the only investments held by the fund are GNMA certificates and short-term T-Bills, the fund is government-guaranteed for safety.

B) If an investor made a one-time deposit of $10,000 in the LIB Aggressive growth fund 5 years ago, and reinvested all dividends and gains, the total value today would be $26,230.75.

C)
The Fantastic Growth Fund has been paying regular dividends and capital gains for the past 6 years. Those who invest now may look forward to continued distributions from the fund in the future.

D) The XY Fund has been producing an average of a 15% total return for the past five years. If a person invested $10,000 today, in five years the total value of the investment would be approximately $21,000.






The correct answer is B.

A mutual fund may only use past performance in illustrations or presentations. Representations regarding future performance based on the fund's past performance are prohibited.



RELATED FAQS

  1. What are the advantages of an index fund over an ETF?

    Diversifying a portfolio is one of pillars of investing basics, and an index fund can provide an investor with exposure to ...
  2. Which are the most popular mutual funds that target the financial services sector?

    Discover some of the most popular and highest rated mutual funds offered that hold stock portfolios in the financial services ...
  3. How are blue-chip stocks similar to mutual funds and exchange-traded funds (ETFs)?

    Understand the primary differences between making investments in blue-chip stocks, mutual funds and exchange-traded funds ...
  4. What are some of the most popular mutual funds for investing in the metals and mining ...

    Explore some of the many mutual fund options available to investors that focus on holdings in the metals and mining sector, ...
RELATED TERMS
  1. Historic Pricing

    A method for calculating the value of an asset using the last ...
  2. Bear Fund

    A mutual fund designed to provide higher returns when the market ...
  3. Ulcer Index - UI

    An indicator developed by Peter G. Martin and Byron B. McCann ...
  4. Investment Company Act Of 1940

    Created in 1940 through an act of Congress, this piece of legislation ...
  5. Product Portfolio

    Investopedia explains: A Product Portfolio is the collection ...
  6. Sharpe Ratio

    A ratio developed by Nobel laureate William F. Sharpe to measure ...

You May Also Like

Related Articles
  1. Mutual Funds & ETFs

    PIMCO vs. BlackRock: Weighing Mega Fund ...

  2. Professionals

    Are Alternative Mutual Funds, ETFs Right ...

  3. Stock Analysis

    Why This Bond Fund Should Be in Your ...

  4. Stock Analysis

    Is PIMCO's Commodity Strategy (PCRDX) ...

  5. Stock Analysis

    Time to Look at PIMCO's Total Return ...

Trading Center