Expert: Paul Henneman - 10/18/2008

Question
If I want to buy mutual funds; at what time of day do I need to place my order and what time does the purchase price get set? EG; if I decide on Monday AM to buy oakbx do I get the closing price from previous close...say Friday?...or is it the closing price on Monday?...I never understood that...thanks

Answer
Donald,
   Thank you for your question! Usually you would get the closing price from the same day that you purchased the fund. In other words, in your example you would the price later that Monday afternoon at market close.
   There is something called ETF (Exchange Traded Funds). These are similar to mutual funds in that you can buy a single ticker symbol which represents a larger group of stocks, such as one of the major indexes, a sector, or industry group. But, an ETF trades like a stock, and you can buy or sell it intra day, at any time you choose. As long as your trading service provides real time trades, it is a much more timely way to invest, if you are trying to trade more frequently.
   Mutual funds are typically used as long term investments, so the exact closing price you get is not of much concern from one day to the next. It is true however that the volatility of the recent market could hurt, if you for example purchase a fund and the market drops 5 or more percent later that day. If you are long term investor interested in mutual funds, and feel that it in general is a good time to do so, don't worry about the exact price you get. If you are trying to trade more frequently, take a look at ETF's.

I hope that this helps! Please do not hesitate to follow up if I can be of any additional service,

Sincerely,
Paul Henneman
President
ValuEngine Inc
www.ValuEngine.com
(800) 381-5576