Defined Portfolio

AAA

DEFINITION of 'Defined Portfolio'

An investment trust that invests in a predefined portfolio of bonds and/or stocks that have been professionally selected by the company. Similar to some classes of mutual funds, these trusts are closed-ended and are not actively managed. The securities in the portfolio are fixed, and units can only be sold after the initial buying phase. These units tend to have a predefined life of a handful of years, after which they are liquidated and the proceeds are returned to the investors.

INVESTOPEDIA EXPLAINS 'Defined Portfolio'

A defined portfolio can trade at different prices throughout the day. Units of a defined portfolio are priced by supply and demand, which can lead to discrepancies in pricing from the net value of its underlying assets. Mutual funds can be out of sync with their net asset values (NAV), but are only priced once a day at the NAV as of the close of trading.

RELATED TERMS
  1. Asset Management

    1. The management of a client's investments by a financial services ...
  2. Net Asset Value - NAV

    A mutual fund's price per share or exchange-traded fund's (ETF) ...
  3. Passive Management

    A style of management associated with mutual and exchange-traded ...
  4. Portfolio

    A grouping of financial assets such as stocks, bonds and cash ...
  5. Liquidate

    1. To convert assets into cash or equivalents by selling them ...
  6. Active Management

    The use of a human element, such as a single manager, co-managers ...
Related Articles
  1. One Portfolio For Asset Allocation
    Investing Basics

    One Portfolio For Asset Allocation

  2. Closing Mutual Funds: Investment Protection ...
    Mutual Funds & ETFs

    Closing Mutual Funds: Investment Protection ...

  3. What is a permanent portfolio?
    Investing

    What is a permanent portfolio?

  4. Mutual Fund Basics Tutorial
    Mutual Funds & ETFs

    Mutual Fund Basics Tutorial

comments powered by Disqus
Hot Definitions
  1. Correlation

    In the world of finance, a statistical measure of how two securities move in relation to each other. Correlations are used ...
  2. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  3. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  4. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  5. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  6. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
Trading Center