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Mutual Funds

A mutual fund is an investment Mutual Fund Imagecompany that pools money from investors and invests in a portfolio of stocks, bonds, money-market instruments, or other securities or assets based on specific investment goals (such as capital appreciation, current income, principal protection, tax-free interest income, etc).  Investors purchase shares of the mutual fund which represent an ownership stake in the fund, and entitle the investor to the income and capital gains that the fund generates from its investments.

Investors choose to invest in mutual funds because they offer liquidity, diversification, and professional management.

  • Liquidity – mutual fund shares are liquid because funds are required by law to redeem (i.e. stand willing buy their shares back from investors) all of their shares at the fund’s net asset value or NAV.
  • Diversification – mutual funds can invest in a wide variety of assets, and as such, an ownership  stake in a single mutual fund may offer an investor exposure to a many different securities, reducing or eliminating non-systematic risk (business-specific risk).
  • Professional management – mutual funds may hire a portfolio manager to actively determine what securities to choose for its portfolio.  Professional managers may have the experience, the knowledge, and ability to evaluate the many potential investments and select those most suited for the fund.

Knopman Notes
Mutual fund assets exceed $8 trillion dollars, and are a large portion of many retail investor’s portfolios and retirement accounts.  In light of this, candidates for registration must demonstrate knowledge and mastery of the rules, regulations, and characteristics of these products.  This includes the ability to match customer objectives with funds objectives, how customers can minimize sales charges (such as breakpoints), and fund’s tax characteristics.

Relevant Exams:
Series 7, Series 24, Series 63, Series 65, Series 66

Dave's mission (and job: Managing Director of Course Design) is to make FINRA exam training engaging, approachable, and dare he even say, enjoyable. Having trained and coached over ten thousand students to exam success he knows how to present complex subjects in memorable and understandable ways. Prior to joining Knopman Marks in 2011, Dave practiced bankruptcy law at Weil, Gotshal & Manages and served as a law clerk in a the Southern District of New York Bankruptcy Court working on the General Motors and Lehman Brothers bankruptcies. Building on his legal expertise and training allows him to keep all our courses updated with the latest legislative and rule-making changes. Dave currently trains for the Securities Industry Essentials (SIE) exam and the Top-Off Series 6, 7, 24, 57, 63, 65, 66, 79, 86, 87, and 99 exams. He also delivers executive one-on-one training and shares his passion for learning outside of work as a ski instructor and yoga teacher. Dave graduated magna cum laude from Fordham Law School, and cum laude with a BA from the University of Pennsylvania.