Investment funds are considered the best choice for investment managers. These funds can be managed by professionals and have the potential to provide investors with high returns. Companies invest money in mutual funds an investor in individual stocks, bonds and other short-term or long-term securities. Major mutual fund companies to ensure that investors have of him the best possible services and options.

If a person decides to invest in mutual funds then he / she has two options. He or she can invest and purchase funds through several dealers that sell mutual funds. The tastes are banks, insurance companies, brokers and discount brokers. Moreover, a person can buy mutual funds directly from a mutual fund company. A great advantage of dealing directly with mutual fund companies is that no transaction costs involved in the process. Unlike other sellers of mutual funds, mutual fund companies have no hidden agenda. In addition, an individual does not have to worry about mutual funds being loaded (which is when the owners have to pay transaction costs in the beginning, middle or end of the offer).

Mutual fund companies invest the money in different stock investors, stocks and bonds. The combined holdings of a mutual fund is known as its portfolio. Each share in the company represents a share of individual investors in the funds and revenue generated. So when a person invests in a part of the company, he or she becomes a shareholder of the mutual fund company.

In the case of benefits to all holders of investment funds are provided to dividends of the company. However, if the losses came after shares of the decrease in the value of the company. Mutual fund companies tend to divide the funds based on risk factors involved and the fees for each. Usually charge more if people want to invest in hedge funds. However, a high rate does not necessarily indicate higher returns because these stocks fluctuate daily. Based on their risk factors and duration of a fund to be held investment funds are generally divided into the following types:

* Class A Shares of these are considered the best option if people have plans of holding stocks for 2 or more years.

* These Class B Shares are beneficial to long-term exploitation of stocks. In general, small investors prefer these stocks. No front end fees and the burden of supporting the decrease in sales.

* Class C Shares These are considered the best for short term investors. Front end fees is not required in any of these stocks.

No matter how well the investment funds of a company makes, certain risk factors will always be there. Before investing in a mutual fund, an individual must decide what risk he / she is willing to take. Only then should one go ahead with it.

One of the advantages of mutual funds is the fact that, allow diversification of its investment portfolio. Many investors in the investment pool resources with the sole purpose of profit. However, in order to avoid losses, investors put their money into sectors that are not coupled, so that when a low investment, its effect on the overall performance of the portfolio is balanced to be made by non – profit, or the one one that will remain stable.

As an investor, in order to diversify your investment, you have to invest their money in a wide range of investment options ranging from stocks, bonds, money market real estate and business opportunities. This is possible by investing in mutual funds, where fund managers monitor and measure the performance of the pool against the likelihood of over investment. These managers, not by assigning these part of the resources available to stocks, bonds and side to side real estate, among other investments.

The choice of stock or bond mutual funds to invest in depends on the market capitalization of the company issuing the option, and how that particular company is able to weather the effects of any down turn in the market. Stocks, bonds or securities in a particular industry tend to move together because of their dependence, for example, when oil prices rise, the value of energy stocks will fall as operating costs soar.

The fundamental importance of investment funds is to spread the risk associated with investing in a single bond, stock or option. Some investors make the mistake of investing their money in companies that control the markets of today, only to wake up tomorrow to look down. A good recent example is the Enron and Worldcom investors sunk millions of dollars earned heard.

AVX Corporation (NYSE: AVX) makes electrical components of all kinds. These parts regulate, filter, and store electrical energy. Essentially, they are the hidden infrastructure inside nearly every electronic device—the crucial components behind cell phones, radios, computers, and much more. Any- thing that needs electrical components could be a potential user of AVX’s broad and diverse product line, which covers over 100,000 product types.

For example, AVX makes 90 percent of the components found in a laptop computer (which has over 1,800 components). It also provides 85 percent of the parts used in a typical cell phone (which has over 500 parts). Just think of all the electronics used by a modern automobile—AVX makes components for those, too. The range of AVX products and applications is staggering.

And with new services and innovations driving the demand for electronic parts, there is no end in sight to the growing number and complexity of these components.

In terms of increasing complexity, just look at the circuit board of the original Intel Pentium processor. That chip had 252 components. Today’s Pentium uses over 900 components. Let me give you another example: Electronic content in automobiles grew from 35 percent of the vehicle’s cost in 2004 to 41 percent in 2005. Electronics in automobiles will be almost 50 percent of vehicle cost by 2006.

I think you’ll agree that the demand for electrical components is not likely to go away anytime soon. If anything, electronic devices will only get more complicated and more varied—creating a further need for newer and more specialized components.

A Cyclical Business with a Tremendous Upside

Despite that rosy picture, very few electronics companies manage to produce consistent profits. The industry goes through periods of boom followed by periods of bust—too much supply, falling prices, and falling profits. Recent years have been most accurately described as bust.

You can see how AVX’s sales and profits surged in the period from 1999 to 2001. After the peak in 2001, the company’s results basically flatlined. In the 2002–2004 period, the company reported small losses (though it remained cash flow–positive; more on that later). Then, in 2005, AVX reported increasing sales and profits for the first time in years. In looking at Table 2.1, 2005 looks a lot like 1999—and that’s good news.

This was exactly the time to consider buying a company like AVX. The trough was behind it, and the upside remained. When times are good inthis industry, they can be very good. At the peak, the company earned over $3 per share. If you slap a price-earnings ratio of only 10 times on that number, you get $30 per share—more than double the $12 share price at the time.

Still, those were crazy times. We don’t need a return to the 2000 bubble to make good on this investment. AVX routinely generated well over $1 per share in cash flow and reliably cranked out steady free cash flow for several years prior to 2000.

And to AVX’s credit, it generated positive free cash flow even in the industry’s worst years.

In short, AVX is a proven survivor, a resilient competitor in a tough industry.

AVX, however, is clearly operating well below its potential. It has a hidden unappreciated ability to deliver much higher levels of future cash flow.

The Olstein Financial Alert Fund is a respected value shop that practices the art of picking up companies operating at less than their full potential. In fact, this practice has been a critical part of its investment success. I’ve had successes, too, buying companies with cyclically depressed earnings.

Eric Heyman, director of research for Olstein, wrote recently about this aspect of Olstein’s approach. “When a company’s potential is not readily apparent, it tends to sell at a material discount to private market value,” he noted. “Most investors only react to what can be easily seen and don’t undertake further analysis . . . by the time the investment masses identify the changes in the company, the valuation gap is usually closed in rapid fashion.”

In other words, by the time the masses get wind of the positive changes at AVX, the stock price should rise quickly.

Not surprisingly, Olstein owns a $20 million stake in AVX, making it one of the largest institutional investors in AVX. The team at Third Avenue, like- minded tangible asset investors, is the largest institutional investor in AVX, with a $98 million investment—more than 5 percent of the company. Both Olstein and Third Avenue have returned more than double the S&P 500 over the past 10 years. It’s always good to know I’m in such smart company. Then, too, there was that balance sheet. . . .

I love companies with pristine balance sheets. They are ready for any- thing this wild world can throw at them. Plus, cash can be a catalyst for good things to happen—like share buybacks and dividends—not to mention that it gives the company the means to make investments to improve the business.

With $725 million in cash and liquid assets and no debt, AVX fits my profile perfectly. That’s about $4.19 per share in cash assets. Backing all that out of the $12 stock price leaves you paying about $8 for the rest of the business. And keep in mind that this is a business that has the potential to crank out at least a buck per share in cash flow when things are more normal—and a lot more if things get really good.

The median price-to-book ratio over the last 10 years was 2.1. AVX was trading for only 1.5 times book. Just to get to the median, the stock would have to rise 40 percent.

I recommended AVX in October 2005. By April 2006, it had gained over 60 percent.