Investopedia

Continue to Site »

Exchange Fund

Filed Under » ,
Dictionary Says

Definition of 'Exchange Fund'

A stock fund that allows an investor to exchange his or her large holding of a single stock for units in a portfolio. Exchange funds provides investors with a easy way to diversify their holdings, while deferring any taxes from capital gains.

Also known as a "swap fund".
Investopedia Says

Investopedia explains 'Exchange Fund'

Because an investor swaps shares with the fund, no sale actually occurs. This allows the investor to defer the payment of capital gains tax until he or she sells the fund's units.

There are both private and public exchange funds. The former deals with companies that are not publicly traded, providing investors with a way to diversify private equity holdings. The public funds offer investors portfolio shares containing publicly traded firms.

Articles Of Interest

  1.

    The Importance Of Diversification

    Without this risk-reduction technique, your chance of loss will be unnecessarily high.

  2. Do You Understand Investment Risk?

    Many investors overestimate their level of financial knowledge.

  3. Solutions For Concentrated Positions

    Learn various tactics for divesting your overexposure to any one stock.

  4. Risk And Diversification

    Safeguarding your portfolio involves a few simple steps.

  5. There Are New REITs On The Horizon

    For investors, the surge in new REIT activity is providing some pretty interesting dividend opportunities.

  6. 5 ETFs Flaws You Shouldn't Overlook

    Despite their popularity, exchange traded funds have some drawbacks that investors should know about.

  7. How are capital gains and dividends taxed differently?

    The U.S. tax code gives similar treatment to dividends and capital gains, although this will change slightly in 2013. Currently, ordinary dividends and short-term capital gains those on assets ...

  8. How Tax Treatments Of ETFs Work

    Here is a look at how ETFs are taxed and the effects that the tax treatment of ETFs will have on investors when they purchase them.

  9. Dividend Facts You May Not Know

    Discover the issues that complicate these payouts for investors.

  10. Simplify Your Portfolio

    Faced with an overabundance of choices, many investors forget to stick to the basics.
comments powered by Disqus
Marketplace
Hot Definitions

  1. Pattern Day Trader

    An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

  2. Cost-Push Inflation

    A phenomenon in which the general price levels rise (inflation) due to increases in the cost of wages and raw materials.

  3. Happiness Economics

    The formal academic study of the relationship between individual satisfaction and economic issues, such as employment and wealth.

  4. Affluenza

    A social condition arising from the desire to be more wealthy, successful or to "keep up with the Joneses." Affluenza is symptomatic of a culture that holds up financial success as one of the highest achievements.

  5. Icarus Factor

    The term Icarus factor describes a situation where managers or executives initiate an overly ambitious project which then fails. Fueled by excitement for the project, the executives are unable to reign in their misguided enthusiasm before it is too late to avoid the failure.

  6. Angelina Jolie Stock Index

    An index made up of a selection of stocks from companies associated with actress Angela Jolie.
Trading Center