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How Do Dynamic Mutual Funds Work?


Dynamic mutual funds are tied to the aggregate performance of a select stock market index rather than the performance of targeted individual stocks and bonds. These funds are passively anchored to the broader environment of within which their various individual elements are traded.

For example, one common benchmark used for dynamic mutual funds is 200%. If such a fund is linked to NASDAQ and the NASDAQ index rises 1% by the end of a trading day, the value of the dynamic mutual fund will increase in by 2%. Conversely, if NASDAQ closes 1% lower that day, the dynamic mutual fund linked to it will drop by 2%.

Rydex Dynamic Mutual Funds

An example of a company that offers dynamic mutual funds is Rydex, based in Maryland. Most of these funds are overseen by Michael J. Dellapa, lead manager since May 8th, 2006. The “NASDAQ-100 2X Strategy H” fund for example is tied to that aforementioned 200% performance becnhmark.

This particular mixes a variety of targeted elements such as futures and securities options. It promises also to invest at least 80% of the fund’s net assets in items that are most likely to perform as the NASDAQ itself performs.

Canadian Namesake Company

In Canada, one of the leading and longest established mutual fund companies is called, simply, Dynamic Mutual Funds. Based in Toronto, the company has been around since 1959 and pops up, inevitably, at the top of Internet searches for the term dynamic mutual funds.

The irony is that even within their product portfolio, the category of “dynamic funds” does not refer to the kind of benchmarked products offered by Rydex. The field of dynamic mutual funds is governed by a very small group of companies. It is an extremely specialized type of mutual fund, one perhaps that the majority of investors tend away from in favor of products where they can directly control each and every fund component.


Resources – Dynamic Stock Market Funds, Retrieved January 23, 2011 from

Yahoo! – Rydex Mutual Funds, Retrieved January 23, 2011 from

Yahoo! – Rydex Dynamic NASDAQ-100 2X Strategy H, Retrieved January 23, 2011 from

Dynamic Mutual Funds, Canada – Retried January 23, 2011 from

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