Mutual Funds

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ETNs

ETNs

Exchange-traded notes represent ~1% of the exchange-traded marketplace; ETFs account for the other 99%. Part of the huge difference in market share is that ETNs have structural risk ETFs do not; ETNs are notes issued by institutional investors such as banks and brokerage firms. If the issuer does not live up to its obligation (repaying principal plus any credited gains), the investor can lose part or all of his/her principal, even if the underlying assets of the ETN have performed well.

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ETNs

Emerging Market Bond Funds

Roughly $85 billion was invested in emerging markets bond funds and ETFs as of March 2013. There are two ways to play these types of bond funds: (1) invest in bonds denominated in the local currencies of the issuing country or (2) buy into a fund whose emerging bonds are denominated in a “hard currency,” such as dollars, euros, or yen. 

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Money Market Funds

Money Market Funds

As of January 2013, three of the largest money market funds—Goldman Sachs, JPMorgan Chase, and Bank of New York Mellon—started to report the daily NAV of their money market funds on their websites. Prior to this, the industry standard was to report NAVs to the SEC monthly. The SEC would then report this information to the public 60 days later.

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ETFs

ETFs

In the U.S., there are over 710 ETF sponsors. At the beginning of 2013, three companies controlled 84% of ETF assets (BlackRock, State Street, and Vanguard). 

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Money Market Funds

ETFs

As of November 2012, the ETF marketplace was valued at $1.3 trillion (vs. $10 trillion invested in mutual funds). iShares (BlackRock) remains the largest player with 41% of the marketplace, down from 60% in 2007. Next to BlackRock, the next two largest ETF sponsors are State Street (25% market share) and Vanguard (18% market share). There are over 1,500 ETFs, and almost all of them are passively managed.

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Diversified REITs

Diversified REITs

REITs are diversified in one of two ways: type of property and location. Critics of diversified REITs contend that transparency is reduced and measurement is more difficult; sector-type REITs can be more easily compared to a more-defined group. Some companies such as Franklin Templeton prefer to only buy REITs for its mutual funds that are specialized in one sector. As of early 2013, the five largest diversified equity REITs were as follows:

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Calculating ETF Costs

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ETFs

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