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.


Nothing contained in this publication is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional.



Net Asset Value (NAV)

Related Articles
  1. 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.
  2. Investing

    The Benefits of Picking Mutual Funds Over Individual Stocks

    Learn about the advantages of investing in mutual funds rather than individual stocks, including the benefits of affordability, oversight and diversification.
  3. Investing

    Mutual Fund Or ETF: Which Is Right For You?

    Learn the differences between these investment products and how to take full advantage.
  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

    Trading Mutual Funds For Beginners

    Learn about the basics of trading and investing in mutual funds. Understand how the fees charged by mutual funds can impact the performance of an investment.
  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. Investing

    Understanding Stocks, Mutual Funds And ETFs

    Three common products, mutual funds, exchange traded funds and equities are similar but function very differently in a portfolio.
  9. Financial Advisor

    5 Secrets You Didn’t Know About Mutual Funds

    Learn five of the "secrets" about mutual funds that can have a significant impact on mutual fund choices and investor profitability.
  10. Investing

    The Difference Between Mutual Funds And Hedge Funds

    Both mutual funds and hedge funds are managed portfolios. A manager chooses securities and then lumps them into a single 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