d. Closed-End Investment Companies: an investment company whose shares trade in the secondary market and are listed on a stock exchange or trade over-the-counter. These funds may be either actively or passively managed. Shares often sell at a premium or discount to the fund's net asset value. As distinct from an open-end mutual fund, capitalization is fixed and assets are not added to the fund; the fund manager need not concern him- or herself with a redemption plan as a result.

Feature/Investment Vehicle
Mutual Fund Closed End Investment Company Exchange Traded Fund
Capitalization Shares are offered continuously. There is one offering of shares. There is one offering of shares.
Issues Common stock. No fixed income. Fixed income, common and preferred shares. Fixed income, common and preferred shares.
Shares Full or fractional are offered Full shares only. Full shares only.
Offerings and Trading Redemption is only through the fund. Redemption is accomplished through sale on the exchange where traded or through the Over-the-Counter market. Redemption is accomplished through sale on the exchange where traded or through the Over-the-Counter market. Shares may be sold short without being subject to the uptick rule.
Pricing Net Asset Value + Sales Charge=Public Offering Price Forces of supply and demand determine the price. Price =current market value + commission. Forces of supply and demand determine the price. Price =current market value + commission.
Shareholder Rights Shareholders of record have rights to receive dividends and to vote. Shareholders of record have rights to receive dividends, to vote and to receive preemptive rights. Shareholders of record have rights to receive dividends, to vote and to receive preemptive rights.
Ex-Date The fund\'s board of directors sets the ex-dividend date. The self-regulatory agency (SRO which is either the NASD or the exchange on which the fund trades.) sets the ex-dividend date. The self-regulatory agency (SRO which is either the NASD or the exchange on which the fund trades.) sets the ex-dividend date.

e. Index Securities: index securities are a passive investment product, either a mutual fund or exchange traded fund that seeks to replicate the performance of a given index. Index products are used to gain low cost exposure to an asset class or subset thereof. Additionally, passive may refer to a low cost investment strategy characterized by minimal trading. Buy and hold is an example.

f. Private Equity: though technically an investment in the equity of a company that is not publicly traded, private equity is a byword for any privately held investment. The risks that apply to publicly traded equity and fixed income apply here as well with the added challenge of illiquidity. Examples are private companies, companies taken private through a leveraged buyout, private placement debt and equity. Such investment requires much time to realize profits due to the inability to exit quickly.


Index Securities

Related Articles
  1. Investing

    A Guide to Mutual Funds Trading Rules

    Make sure to review this guide on the dos and don'ts of mutual fund trading before you invest, including how trades are executed and which fees to look out for.
  2. Investing

    What's a Closed-End Fund?

    A closed-end fund is a mutual fund that has an initial offering (IPO) of shares, and once those shares are sold, no additional shares are issued. Since it is a public offering, closed-end funds ...
  3. Investing

    Open Your Eyes To Closed-End Funds

    Although less popular than their open-ended counterparts, these investment vehicles are worth a second look.
  4. Investing

    An Introduction To Closed-End Mutual Funds

    If you're looking to generate income for your investments, look no further.
  5. Investing

    Closed-End Vs. Open-End Funds

    Open-end products may be a safer choice than closed-end, but closed-end funds might produce a better return.
  6. Investing

    Trading Mutual Funds for a Living: Is It Possible?

    Find out why trading mutual funds for a living isn't your best bet, including how funds discourage short-term trading and which options may better serve you.
  7. Financial Advisor

    Why You Should Consider These Closed-End Funds

    Advisors looking to recommend closed-end funds to clients might want to consider ones that have withstood the test of time. Here are a few examples.
  8. Financial Advisor

    Advising FAs: Explaining Mutual Funds to a Client

    More than 80 million people, or half of the households in America, invest in mutual funds. No matter what type of investor you are, there is bound to be a mutual fund that fits your style.
  9. Investing

    Closed-End Vs Open-End Funds

    Much like an individual’s wardrobe, many portfolios are collections of separate items. They combine stocks and bonds and other investments into one product.
  10. Investing

    How Mutual Fund Managers Pick Stocks

    Learn about how mutual fund managers choose stocks based on the type of funds they manage and the investment goals of the funds' shareholders.
Trading Center