Basic investing terms you need to know - Part 3

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When you open a financial magazine or business section of newspaper, you might have noticed some common financial terms that you don’t understand. I’ll try to provide some details of these terms. The following is the first part of the article. Please check my previous article part 1 & part 2.

Closed-End Fund (CEF)

Closed End Fund (CEF) is also known as Open End Fund. A closed-end fund is a publicly traded investment company that raises a fixed amount of capital through an initial public offering (IPO). The fund is then structured, listed and traded like a stock on a stock exchange such as New York Stock Exchange (NYSE) and/or Nasdaq. Please check my Closed End Fund article for details. The following is some sample of Closed End Funds:

Sample of Closed End Fund
Sample of Closed End Fund

Exchange Traded Fund

Exchange Traded fund (ETF) is an investment fund traded on various stock exchanges. The ETFs consist either bonds or stocks or combination between stocks and bonds and trades at NAV (net asset value) of its assets. Couple reasons why people invest in ETFs are: ETF is very tax efficient, low cost associated with ETF, and it is traded like a stock.

(click column header to sort results)
No  
Fund Name  
Ticker  
Category  
Fund Family  
Net Assets  
Expense Ratio  
1
SPDRs
SPY
Large Blend
SPDR Trust Series 1
66.71B
0.09%
2
SPDR Gold Shares
GLD
N/A
SPDR Gold Trust
38.54B
0.40%
3
iShares MSCI Emerging Markets Index
EEM
Diversified Emerging Mkts
iShares Trust
36.02B
0.72%
4
iShares MSCI EAFE Index
EFA
Foreign Large Blend
iShares Trust
33.64B
0.35%
5
iShares S&P 500 Index
IVV
Large Blend
iShares Trust
20.86B
0.09%

Mutual Fund

Mutual fund is an investment that pools shareholders money and invests it toward a specified goal. Typical the pool money is invested by a professional investment manager. You can buy mutual fund from various provider such as Fidelity, Vanguard, T. Rowe Price, Janus, etc. Various fees are typically associated with mutual fund such as Front-end load fees, back-end load fees, management fees, etc. You can buy various mutual funds such as bond mutual fund, stock/equity mutual fund, hybrid (mix of bond & stock) mutual fund etc.

Top Mutual Fund Providers

(click column header to sort results)
Mutual Fund Company  
Assets Under Management (AUM)  
Assets   
1
The Vanguard Group
$957 Billion
2
American Funds
$931.5 Billion
3
Fidelity
$717 Billion
4
Barclays Global Investors
$287 Billion
5
Franklin Templeton Investments
$256.7 Billion
6
Pimco Funds
$218.7 Billion
7
T Rowe Price Investments
$192.1 Billion
8
State Street Global Investors
$176.8 Billion
9
Oppenheimer Funds
$129.9 Billion
10
Dodge & Cox
$118.2 Billion
Nasdaq Composite Index
Nasdaq Composite Index

NASDAQ

The National Association of Securities Dealers Automated Quotations exchange, including the largest and most widely-traded OTC stocks. It has several indexes such as NASDAQ composite, NASDAQ-100, NASDAQ Biotech index. Major technology stocks are usually listed in NASDAQ such as Google (GOOG), Apple (AAPL), Microsoft (MSFT).

Wal*Mart Profit Margin
Wal*Mart Profit Margin

Profit Margin

Net profit after taxes divided by sales for a specified period, expressed as a percentage. Profit Margin's time period measured is the Most Recent Quarter, annualized. Usually, profit margin is helpful when comparing stocks within similar industries. A higher Profit Margin indicates a more profitable company, which means it's probably doing something great for investors/ shareholders.

Return on Asset (ROA)

An indicator of how profitable a company is relative to its total assets. ROA usually provide an indicator as to how efficient management is at using its assets to generate earnings. Calculated by dividing a company's annual earnings by its total assets, ROA is usually shown as a percentage. Sometimes ROA is referred to as "return on investment". For example please check above Walmart ROA.


Standard & Poor's 500 (S&P 500)

An unmanaged market-weighted index of 500 of the nation's largest stocks from a broad variety of industries. The S&P 500 represents about 80% of the total market value of all stocks on the New York Stock Exchange. Market-weighted means that component stocks are weighted according to the total value of their outstanding shares.

Sample of S&P 500 stocks
Sample of S&P 500 stocks

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Comments 2 comments

LillyGrillzit profile image

LillyGrillzit 6 years ago from The River Valley, Arkansas

29!!!!!!! One more!!!!! You Go!!!!Write On!!!!


chan0512 profile image

chan0512 6 years ago from Camarillo, CA Author

Thanks!

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