There are a wide variety of investments vehicles in which a large pool of investors combine their assets and entrust them to a professional portfolio manager. One of the main advantages of these types of investments is that they give small investors access to professionally managed, diversified portfolios of equities, bonds and other securities that would be quite difficult (if not impossible) to create with a small amount of capital. Fractional ownership in the portfolio is made through the purchase of shares. Each shareholder participates proportionally in the portfolio's gain or loss. Some of the more popular investments in this category include:

Mutual Funds
A mutual fund is an investment vehicle that is made up of a pool of funds collected from many investors, for the purpose of investing in securities such as stocks, bonds, money market instruments and similar assets. Open-end mutual funds and closed-end mutual funds represent two of the three types of investment companies.

Unit Investment Trusts
Unit Investment Trusts (UITs) represent the third type of investment company. UITs buy and hold a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable "units" to investors for a specific period of time. It is designed to provide capital appreciation and/or dividend income.

Exchange-Traded Funds
An ETF is a fund that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange. ETFs experience price changes throughout the day as they are bought and sold.

Hedge Funds
Hedge funds are aggressively managed portfolios that use advanced investment strategies in an effort to generate high returns (either in an absolute sense or over a specified market benchmark). Hedge funds can be thought of as mutual funds for the super rich.

Real Estate Investment Trusts
A Real Estate Investment Trust (REIT) is a dividend-paying stock that focuses on real estate.



Net Asset Value (NAV)

Related Articles
  1. Investing

    Investing In A Unit Investment Trust

    UITs offer professional portfolio selection and a definitive investment objective. Are they right for you?
  2. Investing

    What's a Unit Investment Trust?

    A unit investment trust is an unmanaged investment company that offers a fixed portfolio of stocks and bonds.
  3. Investing

    What You Need to Know About Mutual Funds

    Mutual funds are a good investment opportunity, but investors should know how they operate.
  4. Financial Advisor

    A Mutual Funds Guide for Young Investors

    Learn how mutual funds work, why they are so popular and how younger investors can get started by putting mutual funds in their IRAs or 401(k)s.
  5. Investing

    At Look at REITS vs. Real Estate Mutual Funds (ESRT, TRREX)

    REITs and real estate mutual funds have their differences, but they both offer liquidity and easy access to diversified real estate assets.
  6. Investing

    6 Popular ETF Types For Your Portfolio

    Exchange traded funds are an extremely popular diversification tool that can protect your portfolio during troubled periods.
  7. Managing Wealth

    Should Balanced Funds Be Part Of Your Portfolio?

    Find out why you should include balanced funds in your portfolio, including the importance of customizability, diversification and professional management.
  8. Retirement

    Should Mutual Funds Still Be in Your Retirement Plan?

    Mutual funds are still widely used in retirement plans, but they may be losing their appeal. Find out if retirement mutual funds should be in your portfolio.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center