A registered trust in which investors purchase units from a fixed portfolio of equities, which are chosen and managed by a professional money manager. Securities in the trust remain there for the life of the trust, which is most often one year. At that point they can either be liquidated at market value or rolled over into a newer, current version of the trust. Taobiz explains Equity Unit Investment Trust Because investors purchase units of the trust, this investment allows investors to diversify and participate in dividends and capital gains without purchasing a large number of the equities themselves. There are also various types of equity trust products, allowing investors to choose an investment that closely matches their own risk tolerance and investment goals.
A cross-border European stock exchange, originally created in 2000 from the merger of the Amsterdam, Brussels and Paris stock exchanges. In 2001 and 2002, respectively, Euronext acquired the London International Financial Futures and Options Exchange (LIFFE) and the Portuguese stock exchange, Bolsa de Valores de Lisboa e Porto (BVLP), in order to become one of the world's largest exchanges. On April 4, 2007, Euronext completed their agreed merger with the NYSE Group, resulting in the formation of NYSE Euronext. Taobiz explains Euronext As of 2008, NYSE Euronext manages a variety of exchanges, located in six countries. The company operates the world's most liquid exchange group, with nearly 4,000 listed companies, which represents a total market capitalization of approximately $30.5 trillion.
Using one's ethical principles as the main filter for securities selection. Ethical investing depends on an investor's views; some may choose to eliminate certain industries entirely (such as gambling, alcohol, or firearms) or to over-allocate to industries that meet the individual's ethical guidelines. Ethical investing is sometimes used interchangeably with socially conscious investing, but socially conscious funds typically have one overarching set of guidelines that is used to select the portfolio, whereas ethical investing brings about a more personalized result. Taobiz explains Ethical Investing Ethical investing gives individuals the power to allocate capital toward companies that are in line with their personal views, whether they are based on environmental, religious or political precepts. Investors should keep in mind that "ethical" does not imply "outperform". A good way to start with an ethical investing policy is to write down the areas you want to avoid as well as where you want to see your money invested. From there you can come up with an asset allocation plan and begin researching individual securities and funds.
A type of special investment portfolio in which an investor, with or without the aid of an investment advisor, invests solely in exchange traded funds (ETFs). The composition of each ETF class is initially based on a preselected asset allocation model, and will periodically need to be rebalanced in response to changes in market values. Taobiz explains ETF Wrap Common asset allocation models are 100% equity, 100% fixed income or a balanced model, which contains both fixed income and equity. The choice of model depends on an investor's age, tolerance to risk, income, goals and other personal factors. Investors can choose to manage an ETF wrap themselves in a non-discretionary account, or elect to have a professional do so on their behalf in a discretionary account. ETF wraps are beneficial due to their low expense ratios when compared to other mutual fund wraps. In addition, they offer investors intraday trading, tax efficiency and more. One general problem with these wraps is the cost of trading ETFs. The sale and purchase of ETFs is no different than purchasing normal stock in that commission fees are charged for every transaction; unless the investor is with a discount brokerage, performing frequent trades will be costly.
The company or financial institution which creates and administers an exchange-traded fund. To set up the ETF, the sponsor creates the underlying index around which the ETF will be passively managed. The initial securities chosen for the fund are then delivered to the ETF sponsor by various institutional investors, who in exchange receive creation units – large blocks of ETF shares numbering 100,000 or more. The holders of the creation units then market individual ETF shares to retail investors via the open market (stock exchanges); the ETF sponsor typically will deal only with the creation units and institutional shareholders and will not trade shares directly with retail investors. Watch: Understanding ETF Taobiz explains ETF Sponsor ETF sponsors have created quite a large industry for themselves in the time since the introduction of the first ETF, in 1993. Some of the larger, more diversified ETF sponsors may hold a portion of a fund’s securities in-house, while others are more strictly focused on marketing, index maintenance and market liquidity. The sponsor also redeems physical securities for creation units should the holders of the creation units wish to make the swap. When changes need to be made to an ETF portfolio due to changes in the underlying index, the sponsor will work with its creation-unit holders to exchange securities out for new ones that will reflect the updated index.
An exchange-traded fund (ETF) that tracks other ETFs rather than stocks, bonds or derivatives. ETFs of ETFs track the performance of other ETFs, which may have direct exposure to the underlying securities they track. Watch: Understanding ETF Taobiz explains ETF Of ETFs ETFs of ETFs are tools that provide more diversification than regular ETFs. They can be constructed based on certain desirable factors such as risk levels, time horizons or sectors. One of these financial instruments can give an investor broad exposure to many different sectors and regions. Typically, ETFs have a lower expense ratio compared to more managed funds such as mutual funds.
Shares held in an escrow account and in most cases cannot be traded or transfered until certain circumstances like time horizon have been reached. The use of escrow for holding shares is often done during acquisitions and for performance-based executive incentives. Taobiz explains Escrowed Shares These shares can be held by an escrow company or by the exchange the shares trade on. Let's say a company puts up shares as a guarantee on an acquisition. Should that firm rescind the offer, they're likely to lose the shares.
A hybrid debt instrument that is linked to the equity markets. Equity-linked securities can be in the form of a single stock, a group of stocks or an equity-based index, such as the S&P 500. The return on investment is dependent upon the performance of the underlying equities that are linked to the security. This type of security will often offer a guarantee of principal plus perhaps a small gain in return for a reduced payout of equity gains. Taobiz explains Equity-linked Security - ELKS Equity-linked securities first appeared in the 1990s and have been offered in the form of annuities, mutual funds and CDs. Most equity-linked securities will limit the equity gains that their investors can realize, either in the form of a reduced percentage of gains (such as 70% of all gains with no limit), or an absolute cap (meaning that the investor gets 100% of the gain up to a certain amount each year in total return, such as 10%). For example, an investor with a 70% cap will see $7,000 of gain from a $100,000 investment if the underlying equities post a 10% gain for the year. However, the same investor with the same investment amount in a security with a 10% cap will only see the first $10,000 of gain in a year even if the underlying equities rise by 50%.
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