FAQs about mutual funds in general
Are returns guaranteed?
No. Mutual funds have no guaranteed returns. The course of your investment depends on the course of the markets in which your mutual fund(s) of choice is invested.
However, you may limit investment risk by applying key investment principles:
- Diversify across different investment categories (equities, bonds, cash).
- Diversify across geographical locations.
- Diversify across time.
Is there any risk of capital loss?
Yes. Mutual funds follow the course of the markets. If markets exhibit downward trends, it is possible that mutual funds could have negative yields.
What if I change my mind after investing?
You may redeem your units at any time.
The money you invest in mutual funds is still available to you; the net redemption amount, i.e., the value of your investment minus any redemption fees, is credited to your bank account.
Will I have to pay taxes on mutual funds?
No. According to the applicable law, the capital you invest in mutual funds and any capital gains are both exempt from tax.
However, you should ask your accountant to find out what applies to you.
What is Morningstar®?
One of the most prestigious independent mutual fund rating agencies.
The agency gives mutual funds ratings based on their historical returns and fluctuations. Ratings are always comparative to the rest of the mutual funds in the same category and investment risk is also taken into consideration.
Then, mutual funds get a rating of 1 to 5 stars in this comparative ranking system:
- 5* for mutual funds ranking in the top 10%.
- 4* for mutual funds in the following 22.5%.
- 3* for mutual funds in the following 35%.
- 2* for mutual funds in the following 22.5%.
- 1* for mutual funds in the bottom 10%.
Morningstar® rates mutual funds for which historical data go back at least 3 years, giving 3-, 5- and 10-year ratings. To come up with an overall rating, the agency combines the individual ratings on each mutual fund with the 10-year rating carrying more weight.
Alpha Mutual Funds traditionally get great ratings from Morningstar.