Not exact matches
If I am right that
equity fund managers are fully allocated to stocks now, the only way we can get
excess gains in the stock market is if new liquidity is created by bank lending, or liquidity is transferred from the bond market to
equities.
Norm responds: The
equity mutual fund holds stocks and its return is composed of capital
gains (changes in the price of stocks) plus dividends plus interest on any
excess cash (etc) minus the fund's fee.
However, buying
equities in your child's name from any
excess money (my very young niece and nephew already each have $ 10,000 in
equities) and buying and selling to lock in tax - free capital
gains each year as they grow older is a great way for them to have a really nice nest egg when they are older (but it could also be a bad thing having so much money).
On the occurrence of trigger event, the fund value in
Equity Growth Fund II which is in
excess of three times the fund in Bond Fund will be considered as
gains and will be switched to Liquid Fund by redemption of units from
Equity Growth Fund II.