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Natural gas mutual funds are collective investment plans focusing on investments in the natural gas industry. A number of investment firms offer natural gas mutual funds, and information about the history and performance of these funds is available through investor disclosures and trade publications. Most have a minimum buy in amount people must deposit in order to participate in the fund. The amount required varies, depending on the fund.
Mutual funds in general pool the resources of multiple investors. An investment specialist determines how to allocate and use the funds most effectively, buying stocks and other securities to generate a steady return for investors. Usually, there are fees associated with membership. The fund must also provide annual performance reports for the benefit of current and prospective investors, so they can see what kinds of returns the fund is generating. Returns can be compared with similar funds, as well as the market in general to determine if it is a sound investment.
In the case of natural gas mutual funds, the portfolio of the fund includes a mixture of natural gas investments. Companies involved in exploration for natural gas can be included, along with natural gas producers, processors, and transporters. The mix of the portfolio is adjusted in response to economic conditions, as well as performance of individual companies. If the administrator handles the fund properly, it will generate returns whether natural gas prices are trending up or down.
Investing in commodities like natural gas through mutual funds can provide people with access to a wider assortment of investments with less money. Some investors may prefer mutual funds because they do not feel comfortable assembling and managing their own investment portfolios, while others may not have very much money for investment, and want it to go as far as possible. Natural gas mutual funds tend to generate a slightly lower return on investment than investing independently, because the administrator of the fund uses a cautious investment approach to minimize risk.
Trade publications for investors and other people interested in the financial community often provide reviews of different types of funds, with compare and contrast charts discussing performance, history, and other topics of interest. These can be a good place to start with research, as can contacting mutual funds to request copies of their prospectuses and other financial documents. Other investors may also have tips and advice on the best natural gas mutual funds for new investors to start with.
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