Types of Mutual Funds
Chapters in this video
- 0:00 Growth vs. income and the balanced fund solution
- 1:22 Sector funds and the non-diversified exam trap
- 2:47 Target-date funds and the glide path direction
- 4:03 Money market funds and the $1.00 NAV rule
- 5:05 Interval funds: closed-end structure with no exchange trading
- 6:09 The 5% to 25% repurchase offer range
- 7:26 Pro rata redemption when requests exceed the offer
- 8:44 Rapid-fire exam recap
What this video covers
- The difference between growth funds (reinvest for capital appreciation) and income funds (pay regular distributions), and when a balanced fund is the right middle ground
- Why sector funds are non-diversified by nature, and why concentration in a single industry creates higher risk than broad equity funds
- How target-date funds use a glide path to automatically shift from equities to bonds over time, and why they never become more aggressive as the target date approaches
- Why money market funds seek capital preservation and liquidity, not growth, and why the stable $1.00 net asset value (NAV) per share matters
- The legal structure of an interval fund: registered as a closed-end fund under the Investment Company Act of 1940, no exchange trading, periodic repurchase offers instead
- The 5% minimum and 25% maximum repurchase offer range for interval funds, and what pro rata redemption means when requests exceed the offer amount
- How to spot interval fund exam traps when you see the phrases "no secondary market" and "periodic repurchases" in a question stem
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