IF YOU HAVE THE TIME The Long-Term Potential of Closed-End Funds vs. Open-End Funds

Save this PDF as:
 WORD  PNG  TXT  JPG

Size: px
Start display at page:

Download "IF YOU HAVE THE TIME The Long-Term Potential of Closed-End Funds vs. Open-End Funds"

Transcription

1 IF YOU HAVE THE TIME The Long-Term Potential of Closed-End Funds vs. Open-End Funds Authored by Robert Kenyon, Managing Director, Business Development Closed-end funds have been on the market since 1893, more than 30 years before the first open-end fund (or mutual fund) became available. Nevertheless, demand for them has not been nearly as great as for their better-known siblings. At year-end 2013, the closed-end fund universe consisted of just 599 funds, down from a high of 663 funds in 2007, and had over $279 billion in assets under management. In contrast, investors had 7,707 open-end funds from which to choose, representing more than $15 trillion under management. 1 The significant disparity in assets under management is understandable given the differences in the basic structure of the two investment vehicles. Unlike open-ended funds, closed-end funds: > are usually closed to new capital and investors after their initial public offering (IPO); > do not buy back or redeem investor shares on a daily basis, whereas open-end funds may be redeemed at NAV; > trade during market hours on one of the stock exchanges or over the counter; and > often trade at a premium or discount to net asset value (NAV), much like an oil or technology company s share price will trade in relation to its book value. (These last two attributes have little or no effect on a fund s performance on an NAV basis.) Money flows regularly into open-end funds because they are, as their name suggests, open to new investors and additional dollars from current investors. Existing closed-end funds, on the other hand, are not. That said, closed-end funds deserve to be on the radar of many, if not most, investors because they have shown an ability to outperform open-end funds in the same investment category largely because of their structural differences. In theory, says Mariana Bush, CFA, senior analyst at Wells Fargo Advisors, a closed-end fund should perform better than an open-end fund. A Close Look at Closed-End Funds WHITE PAPER SERIES March 2014 The Differences Behind the Theory Yes, theoretically closed-end funds should outperform open-end mutual funds, in up markets and over time. Then again, in down markets, many closed-end funds will perform worse. The result in each case is due largely to several important differences that exist between closedend and open-end funds. In contrast to their open-end fund counterparts, closed-end fund managers don t have problems with asset flows, the first important difference. This includes inflows of dollars from new and existing investors, and outflows from selling securities to meet investor redemptions. This is fabulous for the portfolio managers because there s no pressure to sell when he or she doesn t want to sell and no reason to buy unless they want to, Bush says. It s also advantageous for the manager not to have to worry about flows because then he or she can invest in illiquid securities if the opportunity is right. Likewise, he or she can better manage taxes in the fund. So, for example, longer duration municipal bonds, lower quality corporates, master limited partnerships (MLPs), and emerging market debt may be more attractive to a closed-end fund manager than to an open-end fund manager who has to worry 1. Source: Investment Company Institute. Closed-end fund data as of December 31, 2013 ( Closed-End Fund Data release, March 10, 2014): open-end fund data as of December 31, 2013 ( Trends in Mutual Fund Investing release, February 27, 2014): stats/trends/ci.trends_01_14.print.

2 that a sudden and sharp increase in redemptions might force him to sell out of a position at an inopportune time. Some open-end funds deal with this by keeping some of the portfolio in cash in a liquidity bucket to meet redemptions, says Steven Pikelny, an analyst at research firm Morningstar, but that kind of warps the portfolio allocations. The closed-end structure eliminates that kind of hassle. Closed-end funds do have certain liquidity concerns, but they re more manageable, Pikelny continues. For example, they may need cash on hand to make distribution payments or to de-lever the portfolio, if necessary. Because of this relative stability of the asset base, closed-end fund managers can leverage those assets up to the limits allowed by the Investment Company Act of 1940, which is the second important difference. While open-end funds may also utilize leverage, it is much more commonly utilized by closed-end funds. Fixed income open-end funds tend to focus on maximizing total return good total return equals more assets in the fund, which equals greater fees. Closed-end funds, on the other hand, tend to be yieldoriented. And the main purpose of leverage is to give them higher yield, Bush says. The final important difference is that because closed-end funds trade on the open market, their prices generally rise and fall based on investor sentiment; consequently, they often trade at a discount or premium to the underlying NAV. Over short periods, price performance may be quite different from NAV. Over longer periods, it is generally very close to NAV. But because the share price is subject to supply and demand, there s an extra layer of volatility on top of what NAV will give you, Pikelny says. Thus, closed-end funds that trade at a discount present another opportunity to investors for additional return, one not available to investors in open-end funds. As the market discovers an undervalued fund, the discount between share price and NAV should narrow. That narrowing represents capital appreciation for the astute investor. So in a closed-end fund, the investor could get the capital appreciation on the NAV because of investment performance and on the share price because of a change in investor sentiment, Pikelny says. Testing the Theory The absence of asset flows, more liberal employment of leverage to enhance returns, and the potential for a narrowing of the NAV discount all are reasons why closed-end funds should outperform open-end funds. Unfortunately, proving the theory is problematic. Apples-to-apples comparisons that support the theory are difficult to find, but not impossible. Pikelny found two comparable high-yield funds, one open-end, the other a closed-end fund that eschewed leverage. In the second quarter of 2013, the open-end fund suddenly experienced substantial outflows. The closed-end fund, because of its structure, did not. When year-to-date performance came out at second quarter-end, the open-end fund had returned 3.6%. The closed-end fund, which followed the same strategy but did not experience any outflows, returned 4.7% on an NAV basis. According to Pikelny, both funds were fairly junky and therefore illiquid, which apparently hurt the open-end fund when it had to meet redemptions. While very limited, this was a good comparison because you find very few examples of similar funds, he reports. The comparison allowed us to isolate the effects of flows on performance. The story doesn t end there, however. The Federal Reserve s announcement during the second quarter of 2013 that it might begin tapering its monthly bond purchases sent the fixed income market universe including both open-end funds and closed-end funds into a tailspin. The closed-end fund I was studying totally gapped out and went from trading at NAV to around an 8% discount by mid-year, Pikelny says. Investors still did better on an NAV basis, but they probably would have been better off in an open-end fund because of the gap. Nevertheless, Pikelny s fund comparison supports the case that a closed-end fund s features should lead to better performance on an NAV basis over time. And the investor who bought that high yield closed-end fund after it gapped? That discount to NAV could eventually accrue to his or her benefit if and when the gap narrows. Of course, one fund comparison does not a proof make. To make a valid argument would require a sizable universe of closed-end funds and open-end funds with similar investment objectives, asset classes, managers, styles, and so on. Unfortunately, that large universe does not exist. In many cases where the funds appear to be comparable, they are actually different enough that the comparison would not be fair, Bush argues. Moreover, doing a study on just a few examples probably doesn t make much sense statistically. So if apples-to-apples comparisons of essentially identical closed-end funds and open-end funds are hard to come by, maybe a broader view using fund categories will give us some insight into the relative performance of the two types of funds a fruit-to-fruit comparison if you will. A Close Look at Closed-End Funds WHITE PAPER SERIES 2

3 Methodology Morningstar maintains performance data on open-end funds in 103 different categories, from aggressive allocation to world stock. Closed-end funds compete in 76 of those categories. Because we see closed-end funds as long-term investment vehicles pursuing long-term investment themes rather than as trading vehicles, we chose to look at 25 categories in which closed-end funds had a least seven funds with 5- and 10-year histories through December 31, For example, 85 closed-end funds in the muni national long category have 10-year track records over that period, while seven in the real estate category meet that criterion. Furthermore, we chose not to compare categories where fewer than seven closed-end funds competed because the sample would be too small. Finally, we compared both types of funds on a total-return-to-nav basis because we wanted to see whether the features of closed-end funds the absence of asset flows, the greater usage of leverage, and the influence of discount narrowing actually enhanced investment performance. The Findings Do the differences between open-end mutual funds and closed-end funds make a difference to the investor? At least over the 5- and 10-year periods ending on December 31, 2013, that appears to be the case (Figure 1). Over the last five years, which was a generally up market, closed-end funds outperformed comparable open-end funds in 88% of the 25 different categories we examined and by an average annualized total return of 3.45%. Likewise, 80% of the closed-end fund sectors we examined outperformed their comparable open-end fund categories over the 10-year period, but this time by an average annualized total return of just 0.44%. That result is understandable given the financial crisis that affected many closed-end funds worse than open-end funds due to the added impact of leverage. FIGURE 1: PERFORMANCE OF CLOSED-END FUND AND MUTUAL FUND CATEGORIES (THROUGH 12/31/13) 5-YEAR TOTAL RETURN 10-YEAR TOTAL RETURN FUND CATEGORY CLOSED-END OPEN-END DIFFERENCE CLOSED-END OPEN-END DIFFERENCE Bank Loan Convertibles Corporate Bond Emerging Markets Bond Equity Energy High Yield Bond High Yield Muni Intermediate-Term Bond Large Blend Large Growth Large Value Long-Term Bond Miscellaneous Region (Stock) Multisector Bond Muni California Long Muni National Long Muni New Jersey Muni New York Long Muni Pennsylvania Muni Single State Long Preferred Stock Real Estate Utilities World Allocation World Bond Average Outperformance by Closed-End Funds 3.45% 0.44% Percentage of Closed-End Funds that Outperformed 88% 80% Number of Categories that Outperformed (out of 25) Source: Morningstar. All returns are net of fees. See last page for total number of funds in each category. Past performance is no guarantee of future results. A Close Look at Closed-End Funds WHITE PAPER SERIES 3

4 Looking at both the 5- and 10-year periods, what stands out is that in four of the eight instances where a closed-end fund category underperformed the comparable open-end fund category, the difference in annualized return was less than 1.7%, and in three cases, less than 1.25%. In just three cases the large growth (both 5- and 10-year) and world allocation (10-year) categories was the difference more than 4% (Figure 2). Contrast that with the fact that over the last five years, 12 of 25 closed-end fund categories outperformed their open-end fund category counterparts by an annualized total return of more than 4%, and 17 categories did so by more than 3%. FIGURE 2: ANNUALIZED TOTAL RETURN OF CLOSED-END FUNDS AND MUTUAL FUNDS 5-YEAR Bank Loan Convertibles Corporate Bond Emerging Markets Bond Equity Energy High Yield Bond High Yield Muni Intermediate-Term Bond Large Blend Large Growth Large Value Long-Term Bond Miscellaneous Region Multisector Bond Muni California Long Muni National Long Muni New Jersey Muni New York Long Muni Pennsylvania Muni Single State Long Preferred Stock Real Estate Utilities World Allocation World Bond 0% 5% 10% 15% 20% 25% 10-YEAR 0% 2% 4% 6% 8% 10% 12% Source: Morningstar. Data as of December 31, Closed-End Fund Share Price Mutual Fund NAV Though the return differences are not as dramatic over the 10-year period, closed-end funds managed to beat their corresponding open-end funds in 13 of the 25 categories by an annualized total return of 1% or more, and seven did so by more than 1.5%. By comparison, during the financial crisis years of , both closed- and open-end funds generally suffered losses; however, closed-end funds underperformed in 24 of the 25 categories examined (corporate bonds was the exception) and by an average annualized total return of 9.4%. Conclusion So does this prove that investors should invest in closed-end funds rather than open-end funds? Of course not; however, the data does show that investors (even conservative investors) should at least consider closed-end funds for possible inclusion in their portfolios, especially if they are investing for the long term. In other words, if they have the time. When investing in closed-end funds, you want to have a long-term perspective given premium/discount volatility, says Jerry Raio, managing director and head of retail origination at Wells Fargo. If you take this approach, the closed-end fund market may offer attractive investment opportunities. A Close Look at Closed-End Funds WHITE PAPER SERIES 4

5 For information on Virtus Closed-End Funds, please contact us at or visit Figure 1 supporting data: For each Morningstar Category, total number of closed- and open-end funds compared: Bank Loan: 26, 253; Convertibles: 9, 90; Corporate Bond: 10, 153; Emerging Markets Bond: 11, 359; Equity Energy: 29, 167; High Yield Bond: 41, 723; High Yield Muni: 11, 180; Intermediate-Term Bond: 7, 1,112; Large Blend: 22, 1,662; Large Growth: 11, 1,781; Large Value: 9, 1,292; Long-Term Bond: 7, 40; Misc. Region (Stock): 17, 41; Multisector Bond: 32, 344; Muni CA Long: 26, 154; Muni National Long: 85, 252; Muni NJ: 12, 61; Muni NY Long: 21, 119; Muni PA: 10, 85; Muni Single State Long: 14, 310; Preferred Stock: 17, 41; Real Estate: 7, 274; Utilities: 8, 69; World Allocation: 10, 554; World Bond: 11, 422. Morningstar data used with permission Morningstar, Inc. IMPORTANT RISK CONSIDERATIONS An investment in a fund may lose value and shares may be worth less when sold than when bought. There can be no assurance that a fund will achieve its investment objectives. This information does not represent an offer, or the solicitation of an offer, to buy or sell securities. Shares of closed-end investment companies trade in the market above, at, and below net asset value. This characteristic is a risk separate and distinct from the risk that a fund s net asset value could decline. A fund is not able to predict whether its shares will trade above, below, or at net asset value in the future. When a fund leverages its portfolio, the value of its shares may be more volatile and all other risks may be compounded. There is a greater level of credit risk and price volatility involved with high yield securities than investment grade securities. Events negatively impacting a municipal security, or the municipal bond market in general, may cause the fund to decrease in value. Emerging markets securities will be more volatile, or more greatly affected by negative conditions, than those in more established foreign markets. Investments in Master Limited Partnerships may be impacted by tax law changes, regulation, or factors affecting underlying assets. VP Distributors, LLC, member FINRA and subsidiary of Virtus Investment Partners, Inc Virtus Investment Partners, Inc.

UNDERSTANDING CLOSED-END FUNDS

UNDERSTANDING CLOSED-END FUNDS Lessons in Investing for Income UNDERSTANDING CLOSED-END FUNDS Income is one of investors most common goals but one not easily achieved, especially in today s low-yielding environment. That s why investors

More information

Important Information about Closed-End Funds and Unit Investment Trusts

Important Information about Closed-End Funds and Unit Investment Trusts Robert W. Baird & Co. Incorporated Important Information about Closed-End Funds and Unit Investment Trusts Baird has prepared this document to help you understand the characteristics and risks associated

More information

Guide to mutual fund investing. Start with the basics

Guide to mutual fund investing. Start with the basics Guide to mutual fund investing Start with the basics Pursue your financial goals Why do you invest? For a rainy day? A secure retirement? Funding a college tuition? Having a specific goal in mind will

More information

An Overview of the US Closed-End Fund Market. By Paul Mazzilli

An Overview of the US Closed-End Fund Market. By Paul Mazzilli An Overview of the US Closed-End Fund Market By Paul Mazzilli Introduction Closed-end funds (CEFs) are professionally managed investment companies that offer investors various unique benefits. They offer

More information

TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP. Supplement to the Currently Effective Prospectus and Summary Prospectus

TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP. Supplement to the Currently Effective Prospectus and Summary Prospectus TRANSAMERICA SERIES TRUST Transamerica Vanguard ETF Portfolio Conservative VP Supplement to the Currently Effective Prospectus and Summary Prospectus * * * The following replaces in their entirety the

More information

Mutual Fund Investing Exam Study Guide

Mutual Fund Investing Exam Study Guide Mutual Fund Investing Exam Study Guide This document contains the questions that will be included in the final exam, in the order that they will be asked. When you have studied the course materials, reviewed

More information

Wells Fargo Advantage Funds announces updates to its money market fund lineup

Wells Fargo Advantage Funds announces updates to its money market fund lineup May 21, 2015 Wells Fargo Advantage Funds announces updates to its money market fund lineup Wells Fargo Advantage Funds today announced that its Board of Trustees preliminarily approved the changes to its

More information

Understanding Leverage in Closed-End Funds

Understanding Leverage in Closed-End Funds Closed-End Funds Understanding Leverage in Closed-End Funds The concept of leverage seems simple: borrowing money at a low cost and using it to seek higher returns on an investment. Leverage as it applies

More information

Closed-End Funds. A closed-end fund is a type of investment company. whose shares are listed on a stock exchange

Closed-End Funds. A closed-end fund is a type of investment company. whose shares are listed on a stock exchange a guide to Closed-End Funds A closed-end fund is a type of investment company whose shares are listed on a stock exchange or are traded in the over-the-counter market. Contents What Is a Closed-End Fund?...2

More information

Exchange Traded Funds

Exchange Traded Funds LPL FINANCIAL RESEARCH Exchange Traded Funds February 16, 2012 What They Are, What Sets Them Apart, and What to Consider When Choosing Them Overview 1. What is an ETF? 2. What Sets Them Apart? 3. How Are

More information

Bond Fund Investing in a Rising Rate Environment

Bond Fund Investing in a Rising Rate Environment MUTUAL FUND RESEARCH Danette Szakaly Ext. 71937 Date Issued: 1/14/11 Fund Investing in a Rising Rate Environment The recent rise in U.S. Treasury bond yields has some investors wondering how to manage

More information

Morningstar Highlights

Morningstar Highlights Morningstar Highlights Second quarter Data as of June 30, 2015 Invesco offers funds that have competitive performance relative to their peers across most style boxes. Below are Invesco funds with four-

More information

Investments, Chapter 4

Investments, Chapter 4 Investments, Chapter 4 Answers to Selected Problems 2. An open-end fund has a net asset value of $10.70 per share. It is sold with a front-end load of 6 percent. What is the offering price? Answer: When

More information

Suggested Answers to Discussion Questions

Suggested Answers to Discussion Questions Suggested Answers to Discussion Questions 1. Arguments for Mutual Fund Ownership Greater level of diversification Professional management Establish an investment program with a limited amount of capital

More information

Pioneer Funds. Supplement to the Summary Prospectuses, as in effect and as may be amended from time to time, for: May 1, 2015

Pioneer Funds. Supplement to the Summary Prospectuses, as in effect and as may be amended from time to time, for: May 1, 2015 Pioneer Funds May 1, 2015 Supplement to the Summary Prospectuses, as in effect and as may be amended from time to time, for: Fund Pioneer Absolute Return Bond Fund Pioneer AMT-Free Municipal Fund Pioneer

More information

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth.

Balanced fund: A mutual fund with a mix of stocks and bonds. It offers safety of principal, regular income and modest growth. Wealth for Life Glossary Aggressive growth fund: A mutual fund that aims for the highest capital gains. They often invest in smaller emerging companies that offer maximum growth potential. Adjustable Rate

More information

BASKET A collection of securities. The underlying securities within an ETF are often collectively referred to as a basket

BASKET A collection of securities. The underlying securities within an ETF are often collectively referred to as a basket Glossary: The ETF Portfolio Challenge Glossary is designed to help familiarize our participants with concepts and terminology closely associated with Exchange- Traded Products. For more educational offerings,

More information

A guide to investing in closed-end funds What you should know before you buy

A guide to investing in closed-end funds What you should know before you buy A guide to investing in closed-end funds What you should know before you buy Before you make an investment decision, it is important to review your financial situation, investment objectives, risk tolerance,

More information

Understanding mutual fund share classes, fees and certain risk considerations

Understanding mutual fund share classes, fees and certain risk considerations Disclosure Understanding mutual fund share classes, fees and certain risk considerations Highlights Mutual funds may offer different share classes most commonly in retail brokerage accounts, Class A, B

More information

BlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk

BlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk BlackRock Diversified Income Portfolio A portfolio from Fidelity Investments designed to seek income while managing risk Fidelity Investments has formed a strategic alliance with BlackRock Investment Management,

More information

KKR Income Opportunities Fund Declares Monthly Distributions of $0.125 Per Share and. Announces Quarterly Investor Call Date

KKR Income Opportunities Fund Declares Monthly Distributions of $0.125 Per Share and. Announces Quarterly Investor Call Date KKR Income Opportunities Fund Declares Monthly Distributions of $0.125 Per Share and Announces Quarterly Investor Call Date New York, NY, January 27 th, 2016 KKR Income Opportunities Fund (the Fund ) (NYSE:

More information

Bob Zenouzi Discusses Delaware s Dividend Income Fund

Bob Zenouzi Discusses Delaware s Dividend Income Fund Bob Zenouzi Discusses Delaware s Dividend Income Fund October 12, 2015 by Robert Huebscher Bob Zenouzi is the lead manager of the real estate securities and income solutions (RESIS) group at Delaware Investments,

More information

Unit Investment Trusts

Unit Investment Trusts a guide to Unit Investment Trusts A unit investment trust (UIT) is a registered investment company that buys and holds a generally fixed portfolio of stocks, bonds, or other securities. Table of Contents

More information

Fixed Income Liquidity in a Rising Rate Environment

Fixed Income Liquidity in a Rising Rate Environment Fixed Income Liquidity in a Rising Rate Environment 2 Executive Summary Ò Fixed income market liquidity has declined, causing greater concern about prospective liquidity in a potential broad market sell-off

More information

Automated Telephone System

Automated Telephone System Automated Telephone System Around-the-Clock Fund and Account Information Welcome to Franklin Templeton Investments automated telephone system for shareholders. 24-HOUR AUTOMATED TELEPHONE SYSTEM Shareholder

More information

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios

Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Purer return and reduced volatility: Hedging currency risk in international-equity portfolios Currency-hedged exchange-traded funds (ETFs) may offer investors a compelling way to more precisely access

More information

Positioning Life Insurance Opportunities. A simple way to tell a compelling story

Positioning Life Insurance Opportunities. A simple way to tell a compelling story Positioning Life Insurance Opportunities A simple way to tell a compelling story Table of Contents Three Buckets... 2 Supporting Tools & Resources... 5 Consumption... 6 Life Insurance Retirement Planning

More information

Invesco Unit Trusts Closed-end strategies

Invesco Unit Trusts Closed-end strategies Invesco Unit Trusts Closed-end strategies A Closed-end fund primer Closed-end funds have many unique qualities Like traditional mutual funds, closed-end funds are generally professionally managed and their

More information

Liquidity and Flows of U.S. Mutual Funds

Liquidity and Flows of U.S. Mutual Funds Liquidity and Flows of U.S. Mutual Funds Paul Hanouna, Jon Novak, Tim Riley, Christof Stahel 1 September 2015 1. Summary We examine the U.S. mutual fund industry with particular attention paid to fund

More information

SPDR Wells Fargo Preferred Stock ETF

SPDR Wells Fargo Preferred Stock ETF SPDR Wells Fargo Preferred Stock ETF Summary Prospectus-October 31, 2015 PSK (NYSE Ticker) Before you invest in the SPDR Wells Fargo Preferred Stock ETF (the Fund ), you may want to review the Fund's prospectus

More information

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015

ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 ALLOCATION STRATEGIES A, C, & I SHARES PROSPECTUS August 1, 2015 Investment Adviser: RidgeWorth Investments A Shares C Shares I Shares Aggressive Growth Allocation Strategy SLAAX CLVLX CVMGX Conservative

More information

SPDR S&P 400 Mid Cap Value ETF

SPDR S&P 400 Mid Cap Value ETF SPDR S&P 400 Mid Cap Value ETF Summary Prospectus-October 31, 2015 Before you invest in the SPDR S&P 400 Mid Cap Value ETF (the Fund ), you may want to review the Fund's prospectus and statement of additional

More information

9 Questions Every ETF Investor Should Ask Before Investing

9 Questions Every ETF Investor Should Ask Before Investing 9 Questions Every ETF Investor Should Ask Before Investing 1. What is an ETF? 2. What kinds of ETFs are available? 3. How do ETFs differ from other investment products like mutual funds, closed-end funds,

More information

INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX

INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX INCOME IN ALL MARKETS COLUMBIA STRATEGIC INCOME FUND Class A COSIX Class C CLSCX Class R CSNRX Class R4 CMNRX Class R5 CTIVX Class Z LSIZX NAVIGATING A CHANGING INTEREST RATE ENVIRONMENT Rise to the challenge

More information

A GUIDE TO MUTUAL FUND INVESTING

A GUIDE TO MUTUAL FUND INVESTING Many investors turn to mutual funds to meet their long-term financial goals. They offer the benefits of diversification and professional management and are seen as an easy and efficient way to invest.

More information

FREQUENTLY ASKED QUESTIONS March 2015

FREQUENTLY ASKED QUESTIONS March 2015 FREQUENTLY ASKED QUESTIONS March 2015 Table of Contents I. Offering a Hedge Fund Strategy in a Mutual Fund Structure... 3 II. Fundamental Research... 4 III. Portfolio Construction... 6 IV. Fund Expenses

More information

Chapter 2 Characteristics of Investment Companies

Chapter 2 Characteristics of Investment Companies Chapter 2 Characteristics of Investment Companies Abstract Chapter 2 provides a brief overview of five types of investment companies: open-end funds, closed-end funds, unit investment trusts, exchange-traded

More information

Future Scholar Direct Program Portfolio Construction. Moderate Growth 529 Portfolio. Moderate 529 Portfolio. Moderate Growth 529 Portfolio

Future Scholar Direct Program Portfolio Construction. Moderate Growth 529 Portfolio. Moderate 529 Portfolio. Moderate Growth 529 Portfolio Future Scholar Direct Program Construction The Future Scholar 29 College Savings Plan offers three investment options, each with a variety of portfolios designed to help meet your college saving needs.

More information

Senior Floating Rate Loans

Senior Floating Rate Loans Senior floating rate loans have become a staple of the U.S. debt market and have grown from a market value of $126 billion in 2001 to $607 billion as of year-end 2011. 1 For over 20 years, managed senior

More information

Investment Companies

Investment Companies Mutual Funds Mutual Funds Investment companies Financial intermediaries that collect funds form individual investors and invest those funds in a potentially wide rande of securities or other asstes Polling

More information

Score. Stifel CONQUEST Portfolios. Research-Driven Portfolios PORTFOLIO STRATEGY EXCHANGE TRADED FUNDS. Ease of Diversification

Score. Stifel CONQUEST Portfolios. Research-Driven Portfolios PORTFOLIO STRATEGY EXCHANGE TRADED FUNDS. Ease of Diversification Stifel CONQUEST Portfolios PORTFOLIO STRATEGY The Washington Crossing Advisors Stifel CONQUEST Portfolios seek to add value by actively allocating assets among U.S. equities, bonds, commodities, and foreign

More information

NAME: CLASS PERIOD: An Introduction to Stocks and Bonds

NAME: CLASS PERIOD: An Introduction to Stocks and Bonds 22.1 An Introduction to Stocks and Bonds There are many different ways to invest your money. Each of them has different levels of risk and potential return. Stocks and bonds are two common types of financial

More information

ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015

ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015 ADVISORSHARES YIELDPRO ETF (NASDAQ Ticker: YPRO) SUMMARY PROSPECTUS November 1, 2015 Before you invest in the AdvisorShares Fund, you may want to review the Fund s prospectus and statement of additional

More information

Welcome! Thanks for investing your time today.

Welcome! Thanks for investing your time today. Welcome! Thanks for investing your time today. Please sign in Fill out your name tag Address your mail card It s not about how much money you earn. It s about how much you save and invest. October 2015

More information

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016.

Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated after the close of business on June 24, 2016. NUVEEN INTELLIGENT RISK CONSERVATIVE ALLOCATION FUND SUPPLEMENT DATED APRIL 18, 2016 TO THE SUMMARY PROSPECTUS DATED DECEMBER 31, 2015 Nuveen Intelligent Risk Conservative Allocation Fund will be liquidated

More information

2016 Summary Prospectus

2016 Summary Prospectus March 1, 2016 Global X Permanent ETF NYSE Arca, Inc: PERM 2016 Summary Prospectus Before you invest, you may want to review the Fund's prospectus, which contains more information about the Fund and its

More information

CMG Managed High Yield Bond Program. 2015 CMG Capital Management Group, Inc.

CMG Managed High Yield Bond Program. 2015 CMG Capital Management Group, Inc. CMG Managed High Yield Bond Program About CMG CMG is a Registered Investment Advisor located in King of Prussia, Pennsylvania founded in 1992 by Stephen Blumenthal. Since our inception, CMG has embraced

More information

MADISON CORPORATE BOND FUND INVESTMENT STRATEGY LETTER

MADISON CORPORATE BOND FUND INVESTMENT STRATEGY LETTER madisonadv.com madisonfunds.com 2015 2Q EXCELLENCE IN INVESTMENT MANAGEMENT MADISON CORPORATE BOND FUND INVESTMENT STRATEGY LETTER Market Review With Independence Day fast approaching, fireworks began

More information

Financial Markets and Institutions Abridged 10 th Edition

Financial Markets and Institutions Abridged 10 th Edition Financial Markets and Institutions Abridged 10 th Edition by Jeff Madura 1 23 Mutual Fund Operations Chapter Objectives provide a background on mutual funds describe the various types of stock and bond

More information

Nine Questions Every ETF Investor Should Ask Before Investing

Nine Questions Every ETF Investor Should Ask Before Investing Nine Questions Every ETF Investor Should Ask Before Investing UnderstandETFs.org Copyright 2012 by the Investment Company Institute. All rights reserved. ICI permits use of this publication in any way,

More information

Fixed Income ETFs: Navigating Today s Trading Environment

Fixed Income ETFs: Navigating Today s Trading Environment Fixed Income ETFs: Navigating Today s Trading Environment Karen Schenone, CFA Vice President, ishares Fixed Income Strategy Khoabane Phoofolo Vice President, ishares Capital Markets Today s Speakers Karen

More information

INVESTMENT DICTIONARY

INVESTMENT DICTIONARY INVESTMENT DICTIONARY Annual Report An annual report is a document that offers information about the company s activities and operations and contains financial details, cash flow statement, profit and

More information

Morningstar Highlights

Morningstar Highlights Morningstar Highlights Third quarter Data as of September 30, 2015 Invesco offers funds that have competitive performance relative to their peers across most style boxes. Below are Invesco funds with four-

More information

Marblehead Financial Services

Marblehead Financial Services Marblehead Financial Services Bill Bartin, CFP Located at Marblehead Bank 21 Atlantic Avenue Marblehead, MA 01945 781-476-0600 781-715-4629 wbartin@infinexgroup.com Mutual Funds Page 1 of 7, see disclaimer

More information

The High Yield ETFs: Market Size, Money Flows, and Liquidity

The High Yield ETFs: Market Size, Money Flows, and Liquidity The High Yield ETFs: Market Size, Money Flows, and Liquidity August 14, 2015 by Heather Rupp of AdvisorShares The entire U.S. fixed income market (municipals, Treasuries, mortgages, corporates, federal

More information

About Hedge Funds. What is a Hedge Fund?

About Hedge Funds. What is a Hedge Fund? About Hedge Funds What is a Hedge Fund? A hedge fund is a fund that can take both long and short positions, use arbitrage, buy and sell undervalued securities, trade options or bonds, and invest in almost

More information

Financial Wellness & Education. Understanding mutual funds

Financial Wellness & Education. Understanding mutual funds Financial Wellness & Education Understanding mutual funds Benefits of mutual funds Foresters Financial Services provides everyday families and individuals with financial solutions, guidance and tools,

More information

Diversified Managed Allocations

Diversified Managed Allocations Diversified Managed Allocations Multi-strategy portfolios with a focus on flexibility Is this program right for you? DMA is designed for investors who: Want experienced, professional money managers to

More information

Investing. Mutual Fund. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567

Investing. Mutual Fund. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567 Mutual Fund Investing Your promotional imprint here and/or back cover. ABC Company 123 Main Street Anywhere, USA 12345 www.sampleabccompany.com 800.123.4567 Mutual funds are one of the most popular ways

More information

Portfolio Management. Bertrand Groslambert. bertrand.groslambert@skema.edu. Skema Business School

Portfolio Management. Bertrand Groslambert. bertrand.groslambert@skema.edu. Skema Business School Portfolio Management Bertrand Groslambert bertrand.groslambert@skema.edu Skema Business School International Portfolio Management Asset Management Industry 1 Course Outline Introduction (lecture 1) Presentation

More information

Mutual Funds. What s a mutual fund? Consider investing in mutual funds. Diversification Professional management More free time

Mutual Funds. What s a mutual fund? Consider investing in mutual funds. Diversification Professional management More free time Mutual Funds Diversification Professional management More free time Consider investing in mutual funds Easy way to get started investing Only takes a small initial amount You get professional management

More information

Chapter 1 The Investment Setting

Chapter 1 The Investment Setting Chapter 1 he Investment Setting rue/false Questions F 1. In an efficient and informed capital market environment, those investments with the greatest return tend to have the greatest risk. Answer: rue

More information

Fund Types. Mutual Funds. Chapter 4 Mutual Funds. Mutual Funds. Mutual Funds. Investment Companies and Fund Types

Fund Types. Mutual Funds. Chapter 4 Mutual Funds. Mutual Funds. Mutual Funds. Investment Companies and Fund Types Chapter 4 Mutual Funds 4 Mutual Funds Investment Companies and Fund Types Mutual Fund Operations Mutual Fund Costs and Fees Short-Term Funds Long-Term Funds Mutual Fund Performance Closed-End Funds and

More information

Mutual Fund Basics TYPES OF MUTUAL FUNDS WHAT ARE THE BENEFITS OF INVESTING IN A MUTUAL FUND?

Mutual Fund Basics TYPES OF MUTUAL FUNDS WHAT ARE THE BENEFITS OF INVESTING IN A MUTUAL FUND? Mutual Fund Basics A mutual fund pools the money of many investors to purchase securities. The fund s manager buys securities to pursue a stated investment strategy. By investing in the fund, you ll own

More information

MainStay VP Janus Balanced Portfolio

MainStay VP Janus Balanced Portfolio Summary Prospectus May 1, 2015 MainStay VP Janus Balanced Portfolio To Statutory Prospectus To Statement of Additional Information Before you invest, you may want to review the Portfolio's Prospectus,

More information

Waddell & Reed Advisors Select Plus Annuity SM Invest in your future

Waddell & Reed Advisors Select Plus Annuity SM Invest in your future Investment choices performance report January 31, 2016 Waddell & Reed Advisors Select Plus Annuity SM Invest in your future Answers to frequently asked questions. What you should know about purchasing

More information

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst

NPH Fixed Income Research Update. Bob Downing, CFA. NPH Senior Investment & Due Diligence Analyst White Paper: NPH Fixed Income Research Update Authored By: Bob Downing, CFA NPH Senior Investment & Due Diligence Analyst National Planning Holdings, Inc. Due Diligence Department National Planning Holdings,

More information

High-yield bonds. Bonds that potentially reward investors for taking additional risk. High-yield bond basics

High-yield bonds. Bonds that potentially reward investors for taking additional risk. High-yield bond basics High-yield bonds Bonds that potentially reward investors for taking additional risk Types of high-yield bonds Types of high-yield bonds include: Cash-pay bonds. Known as plain vanilla bonds, these bonds

More information

Wealth Management Education Series. Explore the Field of Mutual Funds

Wealth Management Education Series. Explore the Field of Mutual Funds Wealth Management Education Series Explore the Field of Mutual Funds Wealth Management Education Series Explore the Field of Mutual Funds Managing your wealth well is like tending a beautiful formal garden

More information

COMPANY OF NEW YORK ML of New York Variable Annuity Separate Account A Supplement Dated January 17, 2014 to the Prospectus For MERRILL LYNCH INVESTOR

COMPANY OF NEW YORK ML of New York Variable Annuity Separate Account A Supplement Dated January 17, 2014 to the Prospectus For MERRILL LYNCH INVESTOR TRANSAMERICA ADVISORS LIFE INSURANCE COMPANY Merrill Lynch Life Variable Annuity Separate Account A Supplement Dated January 17, 2014 to the Prospectus For MERRILL LYNCH INVESTOR CHOICE ANNUITY (INVESTOR

More information

Understanding the Advantages of Closed-End Funds

Understanding the Advantages of Closed-End Funds Understanding the Advantages of Closed-End Funds Table of Contents Introduction...1 Exchange Traded Funds...4 Advantages...5 Investment Risk...11 Types of Closed-End Funds...13 Buying and Selling...16

More information

Evergreen INSTITUTIONAL MONEY MARKET FUNDS. Prospectus July 1, 2009

Evergreen INSTITUTIONAL MONEY MARKET FUNDS. Prospectus July 1, 2009 Evergreen INSTITUTIONAL MONEY MARKET FUNDS Prospectus July 1, 2009 Evergreen Institutional 100% Treasury Money Market Fund Evergreen Institutional Money Market Fund Evergreen Institutional Municipal Money

More information

Is it time to hire a professional to manage your bonds?

Is it time to hire a professional to manage your bonds? Is it time to hire a professional to manage your bonds? Today s bond markets are more complex Finding the right bonds can be difficult. The bond markets are large and complex, and it takes a lot of homework

More information

Closed-End Fund Discounts: Is the Trend Reversing?

Closed-End Fund Discounts: Is the Trend Reversing? JANUARY 216 www.calamos.com/cef ROBERT F. BUSH, JR. SVP, DIRECTOR OF CLOSED-END FUND PRODUCTS Closed-End Fund Discounts: Is the Trend Reversing?» The closed-end fund space continues to suffer wide discounts

More information

THE DURSO WEALTH MANAGEMENT GROUP S DISCRETIONARY PORTFOLIO MANAGEMENT INVESTMENT STRATEGIES

THE DURSO WEALTH MANAGEMENT GROUP S DISCRETIONARY PORTFOLIO MANAGEMENT INVESTMENT STRATEGIES Morgan Stanley 20 Linden Place Red Bank, NJ 07701 (732) 936-3400 THE DURSO WEALTH MANAGEMENT GROUP AT MORGAN STANLEY THE DURSO WEALTH MANAGEMENT GROUP S DISCRETIONARY PORTFOLIO MANAGEMENT INVESTMENT STRATEGIES

More information

Lord Abbett High Yield Fund

Lord Abbett High Yield Fund SUMMARY PROSPECTUS Lord Abbett High Yield Fund APRIL 1, 2015 CLASS/TICKER CLASS A... LHYAX CLASS I... LAHYX CLASS R4... TBD CLASS B... LHYBX CLASS P... LHYPX CLASS R5... TBD CLASS C... LHYCX CLASS R2...

More information

Exchange Traded Funds A Brief Introduction

Exchange Traded Funds A Brief Introduction Exchange Traded Funds A Brief Introduction spdrs.com What You Need to Know about ETFs ETF Basics Potential Benefits of ETFs ETFs versus Mutual Funds The Role of ETFs in Your Portfolio Our Next Steps Frequently

More information

Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA

Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA Managing Home Equity to Build Wealth By Ray Meadows CPA, CFA, MBA About the Author Ray Meadows is the president of Berkeley Investment Advisors, a real estate brokerage and investment advisory firm. He

More information

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests

Bond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests a guide to Bond Mutual Funds A bond mutual fund is an investment company that pools money from shareholders and invests primarily in a diversified portfolio of bonds. Table of Contents What Is a Bond?...

More information

WHAT ROLE DO BONDS PLAY IN YOUR PORTFOLIO? Guard Against Interest Rate Risk and Credit Events

WHAT ROLE DO BONDS PLAY IN YOUR PORTFOLIO? Guard Against Interest Rate Risk and Credit Events RETHINK YOUR BONDS Building Better Bond Portfolios Interest rates may inch up this year, but expect them to be low for some time to come. You can continue to achieve your fixed income goals in this environment

More information

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale)

Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Summary Prospectus October 30, 2015 Brown Advisory Strategic Bond Fund Class/Ticker: Institutional Shares / (Not Available for Sale) Before you invest, you may want to review the Fund s Prospectus, which

More information

FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS.

FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS. FREE MARKET U.S. EQUITY FUND FREE MARKET INTERNATIONAL EQUITY FUND FREE MARKET FIXED INCOME FUND of THE RBB FUND, INC. PROSPECTUS December 31, 2014 Investment Adviser: MATSON MONEY, INC. 5955 Deerfield

More information

Closed-End Funds. and the Financial Advisor

Closed-End Funds. and the Financial Advisor Closed-End Funds Closed-End Funds and the Financial Advisor A NATIONAL RESEARCH STUDY How financial advisors use closed-end funds with their clients What sets these advisors and their practices apart Primary

More information

Explore the Field of Mutual Funds

Explore the Field of Mutual Funds Wealth Management Education Series How can we help you further? Do you have a question on what you have just read? Would you like to have a further discussion on this subject? Contact your Relationship

More information

Where you hold your investments matters. Mutual funds or ETFs? Why life insurance still plays an important estate planning role

Where you hold your investments matters. Mutual funds or ETFs? Why life insurance still plays an important estate planning role spring 2016 Where you hold your investments matters Mutual funds or ETFs? Why life insurance still plays an important estate planning role Should you undo a Roth IRA conversion? Taxable vs. tax-advantaged

More information

L2: Alternative Asset Management and Performance Evaluation

L2: Alternative Asset Management and Performance Evaluation L2: Alternative Asset Management and Performance Evaluation Overview of asset management from ch 6 (ST) Performance Evaluation of Investment Portfolios from ch24 (BKM) 1 Asset Management Asset Management

More information

Closed End Funds 101 Possible author notation

Closed End Funds 101 Possible author notation Closed End Funds 101 Possible author notation Closed-end funds (CEFs) are investment vehicles, actively managed by separate entities known as investment advisors, distinguished by their unique features

More information

Benefits of Separately Managed Accounts

Benefits of Separately Managed Accounts 703 Market Street, 18th Floor San Francisco, CA 94103 800.541.7774 Benefits of Separately Managed Accounts Separately Managed Accounts are known under a number of other names including individually managed

More information

With interest rates at historically low levels, and the U.S. economy showing continued strength,

With interest rates at historically low levels, and the U.S. economy showing continued strength, Managing Interest Rate Risk in Your Bond Holdings THE RIGHT STRATEGY MAY HELP FIXED INCOME PORTFOLIOS DURING PERIODS OF RISING INTEREST RATES. With interest rates at historically low levels, and the U.S.

More information

Understanding the taxability of investments

Understanding the taxability of investments Understanding the taxability of investments Managing your portfolio to help control your tax bill Investors need to consider many factors in the process of choosing investments. One at the top of many

More information

BONDS VS. STOCKS IN A VALUE PORTFOLIO. Ben Graham Centre's 2013 Value Investing Conference

BONDS VS. STOCKS IN A VALUE PORTFOLIO. Ben Graham Centre's 2013 Value Investing Conference BONDS VS. STOCKS IN A VALUE PORTFOLIO Ben Graham Centre's 2013 Value Investing Conference BONDS VS. STOCKS I hunt for bargains and it has been my experience that when I find an undervalued stock often

More information

SUMMARY PROSPECTUS. TCW High Yield Bond Fund FEBRUARY 29 I SHARE: TGHYX N SHARE: TGHNX

SUMMARY PROSPECTUS. TCW High Yield Bond Fund FEBRUARY 29 I SHARE: TGHYX N SHARE: TGHNX TCW High Yield Bond Fund I SHARE: TGHYX N SHARE: TGHNX 20 6 FEBRUARY 29 SUMMARY PROSPECTUS Before you invest, you may want to review the Fund s Prospectus which contain more information about the Fund

More information

FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS

FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS With about $713 billion in assets, the bank loan market is roughly half the size of the high yield market. However, demand

More information

Research Update on Mutual Funds and Shareholder Sentiment

Research Update on Mutual Funds and Shareholder Sentiment Research Update on Mutual Funds and Shareholder Sentiment Investment Company Directors Conference November 12, 2009 Amelia Island, FL Brian Reid Chief Economist Overview Asset appreciation has lifted U.S.-registered

More information

The Search for Yield Continues: A Re-introduction to Bank Loans

The Search for Yield Continues: A Re-introduction to Bank Loans INSIGHTS The Search for Yield Continues: A Re-introduction to Bank Loans 203.621.1700 2013, Rocaton Investment Advisors, LLC Executive Summary With the Federal Reserve pledging to stick to its zero interest-rate

More information

Fixed-income opportunity: Short duration high yield

Fixed-income opportunity: Short duration high yield March 2014 Insights from: An income solution for a low or rising interest-rate environment Generating income is a key objective for many investors, and one that is increasingly difficult to achieve in

More information

The Advisors Inner Circle Fund. Westwood LargeCap Value Fund. Summary Prospectus March 1, 2015 Ticker: Institutional Shares WHGLX

The Advisors Inner Circle Fund. Westwood LargeCap Value Fund. Summary Prospectus March 1, 2015 Ticker: Institutional Shares WHGLX The Advisors Inner Circle Fund Westwood LargeCap Value Fund Summary Prospectus March 1, 2015 Ticker: Institutional Shares WHGLX Before you invest, you may want to review the Fund s complete prospectus,

More information

FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS. Why does the bank loan sector remain so attractive?

FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS. Why does the bank loan sector remain so attractive? FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS Bank loans present a compelling income opportunity and a portfolio diversifier that provides protection against traditional

More information

(expenses that you pay each year as a percentage of the value of your investment)

(expenses that you pay each year as a percentage of the value of your investment) July 31, 2015 SUMMARY PROSPECTUS SAAT Core Market Strategy Allocation Fund (SKTAX) Class A Before you invest, you may want to review the Fund s prospectus, which contains information about the Fund and

More information

Magellan Global Equities Fund An Innovative Vehicle for Global Equity Investors

Magellan Global Equities Fund An Innovative Vehicle for Global Equity Investors Magellan Global Equities Fund An Innovative Vehicle for Global Equity Investors March 2015 Important Information This presentation ( Presentation ) has been produced by Magellan Asset Management Limited

More information