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Index Funds: What Makes Them Tick?

Robert Abbott , ,

By: Robert F. Abbott, freelance writer and author of Big Macs & Our Pensions

One of the solid arguments behind investing in index mutual funds is that they’re relatively easy picks.

Yet, behind the fund themselves lies a whole arcane world of price drivers. As the following article from Zacks (a reputable research and investment house) shows, the prices of index funds vary from day to day, because of all the financial news that affects the underlying securities (note: this article came out before today’s trading session began):

Major Indexes To Start Todays Session Modestly In The Green
Zacks.com, on Mon, 16 Nov 2015 06:15:00 -0800
The major indexes are on track to start today’s session modestly in the green despite the Paris events over the weekend. We have a relatively light data docket today, but the rest of this week packs a lot of Retail sector earnings reports. On the …

http://www.zacks.com/stock/news/198034/major-indexes-to-start-todays-session-modestly-in-the-green

As we see in the article, some of the issues that will affect stock and mutual fund prices are the number of housing starts, inflation readings, and department store sales. Those are just a few of the factors that will affect the value of your index mutual fund this week.  Stand by for more next week, and the week after that….

As a mutual fund owner, you don’t need to study this information; after all that’s why you’ve ‘hired’ a professional fund manager.

But, I hope it will give you a little more insight into the ups and downs of your index fund.

The Writer

Robert F. Abbotttop mutual funds is a freelance writer; see his profiles and analyses of value stocks at GuruFocus.com . He is also the author of Big Macs & Our Pensions: Who Gets McDonald’s Profits?

In this book, you will:

  • Discover the Ownership Revolution, and what it means to your retirement funding.
  • Find out how much of your lunch bill is a profit for McDonald’s, and who gets the profits.
  • Learn how corporate profits fuel one of the greatest social programs ever developed.

Click here to read a free preview at Amazon.com

Robert Abbott

Robert F. Abbott has been investing his family’s accounts since 1995, and in 2010 added options, mainly covered calls and collars with long stocks. In his other writing, Abbott explores how the middle class has come to own much of big business through pension funds and mutual funds, what management guru Peter Drucker called the Unseen Revolution. In Big Macs & Our Pensions: Who Gets McDonald's Profits?, the first of a series of booklets on this subject, he looks at the ownership of McDonald’s and what that means for middle class retirement income. In an eclectic career, Robert Abbott was a radio news writer and announcer, a newsletter writer and publisher, a farmer, a telephone operator, and a construction worker. When not working, he has been a busy volunteer, which includes more than a decade of leadership roles at the Airdrie Festival of Lights, one of North America’s leading holiday light displays. He lives in Airdrie, Alberta, Canada.