Mutual Funds, ETFs & Pooled Vehicles Financial Terms & Definitions

25 terms in this topic

Mutual funds, ETFs, and pooled vehicles are collective investment schemes that allow investors to buy shares in a diversified portfolio managed by professionals. Mutual funds are typically actively managed and trade at the end of the day, while ETFs trade on exchanges like stocks and often track an index. These vehicles provide diversification, liquidity, and access to various asset classes for individual investors.

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12b-1 fee

A 12b-1 fee is an annual fee charged by some mutual funds to cover the costs of marketing, distribution, and…

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B

Bond fund

A bond fund is a type of pooled investment vehicle—typically a mutual fund or an exchange-traded fund (ETF)—that invests primarily…

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E

Expense ratio

The expense ratio is the annual fee that all mutual funds, exchange-traded funds (ETFs), and other pooled investment vehicles charge…

Full Definition
12b-1 fee A 12b-1 fee is an annual fee charged by some mutual funds to cover the costs of marketing,… Authorized participant An Authorized Participant (AP) is a large financial institution, such as a market maker, broker-dealer, or bank, that… Back-end load A back-end load is a fee that investors pay when they sell or redeem shares in certain types… Bond fund A bond fund is a type of pooled investment vehicle—typically a mutual fund or an exchange-traded fund (ETF)—that… Closed-end fund A closed-end fund is a type of investment company that raises a fixed amount of capital by selling… Creation/redemption mechanism The creation/redemption mechanism is the unique process by which exchange-traded fund (ETF) shares are created and redeemed, ensuring… Exchange-traded fund (ETF) An exchange-traded fund (ETF) is a type of pooled investment vehicle that combines the diversification of a mutual… Expense ratio The expense ratio is the annual fee that all mutual funds, exchange-traded funds (ETFs), and other pooled investment… Front-end load A front-end load is a sales charge or commission that investors pay when they purchase shares of a… Fund of funds A fund of funds (FOF) is a pooled investment vehicle that invests in a portfolio of other funds… Index fund An index fund is a type of exchange-traded fund or mutual fund designed to track the performance of… Money market fund A money market fund is a type of mutual fund that invests in short-term, high-quality, low-risk debt securities.…