Mutual fund

mutual fundsfundfunds
Exchange-traded funds (ETFs) are open-end funds or unit investment trusts that trade on an exchange. Some close- ended funds also resemble exchange traded funds as they are traded on stock exchanges to improve their liquidity. Mutual funds are also classified by their principal investments as money market funds, bond or fixed income funds, stock or equity funds, hybrid funds or other. Funds may also be categorized as index funds, which are passively managed funds that match the performance of an index, or actively managed funds. Hedge funds are not mutual funds; hedge funds cannot be sold to the general public as they require huge investments.

Portfolio (finance)

portfolioinvestment portfolioportfolios
In finance, a portfolio is a collection of investments held by an investment company, hedge fund, financial institution or individual. The term “portfolio” refers to any combination of financial assets such as stocks, bonds and cash. Portfolios may be held by individual investors and/or managed by financial professionals, hedge funds, banks and other financial institutions. It is a generally accepted principle that a portfolio is designed according to the investor's risk tolerance, time frame and investment objectives. The monetary value of each asset may influence the risk/reward ratio of the portfolio. The portfolio is divided into two types.

Outline of finance

List of finance topicsList of valuation topicsFinance
Bond options. Real options. Options on futures. Swap (finance). Interest rate swap. Basis swap. Asset swap. Forex swap. Stock swap. Equity swaps. Currency swap. Variance swap. see: Swap (finance). Contract for difference (CFD). Exchange-traded fund (ETF). Closed-end fund. Inverse exchange-traded fund. Equity options. Equity swap. Real estate investment trust (REIT). Warrants. Covered warrant. LIBOR. Forward rate agreement. Interest rate swap. Interest rate cap. Exotic interest rate option. Bond option. Interest rate future. Money market instruments. Range accrual Swaps/Notes/Bonds. In-arrears Swap.


First, because financial risk is presumed to require at least a small premium on expected value, the return on equity can be expected to be slightly greater than that available from non-equity investments: if not, the same rational calculations would lead equity investors to shift to these safer non-equity investments that could be expected to give the same or better return at lower risk. Second, because the price of a share at every given moment is an "efficient" reflection of expected value, then—relative to the curve of expected return—prices will tend to follow a random walk, determined by the emergence of information (randomly) over time.

Stock exchange

stock exchangesexchangebourse
A stock exchange, securities exchange or bourse is a facility where stockbrokers and traders can buy and sell securities, such as shares of stock and bonds and other financial instruments. Stock exchanges may also provide facilities for the issue and redemption of such securities and instruments and capital events including the payment of income and dividends. Securities traded on a stock exchange include stock issued by listed companies, unit trusts, derivatives, pooled investment products and bonds.

Investment banking

investment bankinvestment bankerinvestment banks
Private equity funds, mutual funds, life insurance companies, unit trusts, and hedge funds are the most common types of buy-side entities. An investment bank can also be split into private and public functions with a Chinese wall separating the two to prevent information from crossing. The private areas of the bank deal with private insider information that may not be publicly disclosed, while the public areas, such as stock analysis, deal with public information. An advisor who provides investment banking services in the United States must be a licensed broker-dealer and subject to U.S. Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) regulation.

Stock market

equity marketstock marketsstock
A stock market, equity market or share market is the aggregation of buyers and sellers (a loose network of economic transactions, not a physical facility or discrete entity) of stocks (also called shares), which represent ownership claims on businesses; these may include securities listed on a public stock exchange, as well as stock that is only traded privately. Examples of the latter include shares of private companies which are sold to investors through equity crowdfunding platforms. Stock exchanges list shares of common equity as well as other security types, e.g. corporate bonds and convertible bonds. Stocks are categorized in various ways.

Closed-end fund

closed-endclosed-endedClosed End Funds
It usually trades at a premium or discount to its net asset value. An open-end fund trades at its net asset value (to which sales charges may be added; and adjustments may be made for e.g. the frictional costs of purchasing or selling the underlying investments). In the United States, a closed-end company can own unlisted securities. Adams Express Company (NYSE:ADX). Witan Investment Trust plc (LSE:WTAN). Scottish Mortgage Investment Trust (LSE:SMT). Tri-Continental Corporation (NYSE:TY). Gabelli Equity Trust (NYSE:GAB). General American Investors Company, Inc. (NYSE:GAM). Collective investment schemes for generic information.


Venture capital and private equity funds, which serve as investment collectives on behalf of individuals, companies, pension plans, insurance reserves, or other funds. Businesses that make investments, either directly or via a captive fund. Investment trusts, including real estate investment trusts. Mutual funds, hedge funds, and other funds, ownership of which may or may not be publicly traded (these funds typically pool money raised from their owner-subscribers to invest in securities). Sovereign wealth funds. Business magnate. Businessperson. Compound interest. Corporate finance. Crowd funding. Financial literacy. Growth capital. Investment. Investor profile. Model audit. Philanthropy.

U.S. Securities and Exchange Commission

Securities and Exchange CommissionSECUnited States Securities and Exchange Commission
Hedge fund managers, broker-dealers, and institutional investors were also asked to disclose under oath certain information pertaining to their positions in credit default swaps. The Commission also negotiated the largest settlements in the history of the SEC (approximately $51 billion in all) on behalf of investors who purchased auction rate securities from six different financial institutions. The SEC has been criticized "for being too 'tentative and fearful' in confronting wrongdoing on Wall Street", and for doing "an especially poor job of holding executives accountable".

Investment trust

investment truststrusttrusts
The board will typically delegate responsibility to a professional fund manager to invest in the stocks and shares of a wide range of companies (more than most people could practically invest in themselves). The investment trust often has no employees, only a board of directors comprising only non-executive directors. Investment trust shares are traded on stock exchanges, like those of other public companies. The share price does not always reflect the underlying value of the share portfolio held by the investment trust. In such cases, the investment trust is referred to as trading at a discount (or premium) to NAV (net asset value).

Unit investment trust

UITsunit trustsunit-investment trusts
Some exchange-traded funds (ETFs) are technically classified as UITs: however, ETFs usually do not have set portfolios (they are either managed or update automatically to follow an index), and they can have lifetimes of over 100 years. For example, the SPDR S&P 500 Trust is scheduled to terminate January 21, 2118, and the PowerShares QQQ Trust is scheduled to terminate March 4, 2124. Collective investment scheme. Mutual fund. Stockbroker. Brokerage firm.

Fund of funds

fund of hedge fundsfunds of fundsfund-of-funds
A "fund of funds" (FOF) is an investment strategy of holding a portfolio of other investment funds rather than investing directly in stocks, bonds or other securities. This type of investing is often referred to as multi-manager investment. A fund of funds may be "fettered", meaning that it invests only in funds managed by the same investment company, or "unfettered", meaning that it can invest in external funds run by other managers. There are different types of FOF, each investing in a different type of collective investment scheme (typically one type per FOF), for example a mutual fund FOF, a hedge fund FOF, a private equity FOF, or an investment trust FOF.


assetstotal assetstangible asset
See also adjusting entries. 1) Investments in securities such as bonds, common stock, or long-term notes. 2) Investments in fixed assets not used in operations (e.g., land held for sale). 3) Investments in special funds (e.g. sinking funds or pension funds). Liability (financial accounting). Trading account assets.


Bonds below Baa/BBB (Moody's/S&P) are considered junk or high-risk bonds. Their high risk of default (approximately 1.6 percent for Ba) is compensated by higher interest payments. Bad Debt is a loan that can not (partially or fully) be repaid by the debtor. The debtor is said to default on his debt. These types of debt are frequently repackaged and sold below face value. Buying junk bonds is seen as a risky but potentially profitable investment. Bonds are debt securities, tradeable on a bond market. A country's regulatory structure determines what qualifies as a security. For example, in North America, each security is uniquely identified by a CUSIP for trading and settlement purposes.

Market liquidity

The investment portfolio represents a smaller portion of assets, and serves as the primary source of liquidity. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. Banks have several additional options for generating liquidity, such as selling loans, borrowing from other banks, borrowing from a central bank, such as the US Federal Reserve bank, and raising additional capital. In a worst-case scenario, depositors may demand their funds when the bank is unable to generate adequate cash without incurring substantial financial losses. In severe cases, this may result in a bank run.

Investment management

portfolio managementasset managementinvestment manager
Investment management (or financial management) is the professional asset management of various securities (shares, bonds, and other securities) and other assets (e.g., real estate) in order to meet specified investment goals for the benefit of the investors. Investors may be institutions (insurance companies, pension funds, corporations, charities, educational establishments etc.) or private investors (both directly via investment contracts and more commonly via collective investment schemes e.g. mutual funds or exchange-traded funds).

Passive management

passive investingpassive investmentpassively managed
Investment funds run by investment managers who closely mirror the index in their managed portfolios and offer little "added value" as managers whilst charging fees for active management are called 'closet trackers'; that is they do not in truth actively manage the fund but furtively mirror the index. Investment funds that employ passive investment strategies to track the performance of a stock market index are known as index funds. Exchange-traded funds are hardly ever actively managed and often track a specific market or commodity indices. Using a small number of index funds and ETFs, one can construct a portfolio that tracks global equity and bond market at a relatively low cost.

Institutional investor

institutional investorsinstitutionalForeign Institutional Investors
An institutional investor is an entity which pools money to purchase securities, real property, and other investment assets or originate loans. Institutional investors include banks, credit unions, insurance companies, pensions, hedge funds, REITs, investment advisors, endowments, and mutual funds. Operating companies which invest excess capital in these types of assets may also be included in the term. Activist institutional investors may also influence corporate governance by exercising voting rights in their investments.

Portfolio manager

portfolio managementportfolio managersPortfolio Management Services (PMS)
Portfolio management is about strengths, weaknesses, opportunities, and threats in the choice of debt vs. equity, domestic vs. international, growth vs. safety, and other trade-offs encountered in the attempt to maximize return at a given appetite for risk. In the case of mutual and exchange-traded funds (ETFs), there are two forms of portfolio management: passive and active. Passive management simply tracks a market index, commonly referred to as indexing or index investing.

Diversification (finance)

But divide your investments among many places. for you do not know what risks might lie ahead. My ventures are not in one bottom trusted. Nor to one place; nor is my whole estate. Upon the fortune of this present year:. Therefore, my merchandise makes me not sad. Central limit theorem. Coherent risk measure. Dollar cost averaging. Equity repositioning. Financial correlation. List of finance topics. Modern portfolio theory. Systematic risk. Macro-Investment Analysis, Prof. William F. Sharpe, Stanford University. An Introduction to Investment Theory, Prof. William N. Goetzmann, Yale School of Management.

Specialized investment fund

A specialized investment fund or SIF is a lightly regulated and tax-efficient regulatory regime in Luxembourg aimed for a broader range of eligible investors. This type of investment fund is governed by the Luxembourg law of 13 February 2007 replacing the law of 1991 defining the legal framework for institutional funds and enlarging the distribution scope to “well-informed investors”. The SIF law significantly simplified the rules for setting up investment fund structures ranging from straightforward investment strategies investing in listed securities to hedge funds, real estate and private equity funds.

Distressed securities

distressed debtdistressedDistressed investments
The major buyers of distressed securities are typically large institutional investors, who have access to sophisticated risk management resources such as hedge funds, private equity firms and units of investment banks. Firms that specialize in investing in distressed debt are often referred to as vulture funds. Investors in distressed securities often try to influence the process by which the issuer restructures its debt, narrows its focus, or implements a plan to turn around its operations. Investors may also invest new capital into a distressed company in the form of debt or equity.


arbitrage-freeregulatory arbitragearbitrageur
Also called municipal bond relative value arbitrage, municipal arbitrage, or just muni arb, this hedge fund strategy involves one of two approaches. The term "arbitrage" is also used in the context of the Income Tax Regulations governing the investment of proceeds of municipal bonds; these regulations, aimed at the issuers or beneficiaries of tax-exempt municipal bonds, are different and, instead, attempt to remove the issuer's ability to arbitrage between the low tax-exempt rate and a taxable investment rate. Generally, managers seek relative value opportunities by being both long and short municipal bonds with a duration-neutral book.

Alternative investment

alternative investmentsalternative assetalternatives
An alternative investment or alternative investment fund (AIF) is an investment or fund that invests in asset classes other than stocks, bonds, and cash. The term is a relatively loose one and includes tangible assets such as precious metals, art, wine, antiques, coins, or stamps and some financial assets such as real estate, commodities, private equity, distressed securities, hedge funds, exchange funds, carbon credits, venture capital, film production, financial derivatives, and cryptocurrencies. Investments in real estate, forestry and shipping are also often termed "alternative" despite the ancient use of such real assets to enhance and preserve wealth.