Types Of Investment Structures

Question 1

Investors buy shares or units in a fund, and the money is invested by a professional portfolio manager.

They do NOT trade throughout the day to avoid allowing people to take advantage of the underlying change in net asset value.

Pooled portfolio.

Answer 1

Mutual Funds

Question 2

This fund trades throughout the day on stock exchanges as if they were stocks.

A basket of securities that you can buy or sell through a brokerage firm on a stock exchange.

Answer 2

Exchange-Traded Funds (ETF)

Question 3

A portfolio of stocks or bonds designed to mimic the composition and performance of a financial market index

They follow a passive investment strategy

They seek to match the and return of the market based on the theory that in the long term, the market will outperform any single investment

Answer 3

Index Funds

Question 4

Financial partnerships that use pooled funds and employ different strategies to earn active returns for their investors

These funds may be managed aggressively or make use of derivatives and leverage to generate higher returns

Answer 4

Hedge Funds

Question 5

A special type of legal entity that allows a person or organization to hold assets they will eventually give to another.

They offer tremendous asset-protection benefits and, at times, tax benefits.

They can hold almost any asset imaginable, from stocks, bonds and real estate to mutual funds, hedge funds and art.

Answer 5

Trust Funds

Question 6

What is a REIT?

Answer 6

Real Estate Investment Trust

A company that owns, operates, or finances income-generating real estate

They pool capital of numerous investors

This makes it possible for individual investors to earn dividends from real estate investments-w/o having to buy, manage, or finance any properties themselves