Funds

Core-Satellite Strategy A portfolio approach that combines a large core holding in a broad, low-cost index fund with smaller satellite positions in specialized or actively managed funds.

Cost Basis Methods for Mutual Funds: Average Cost vs Specific Shares Compare average-cost, FIFO, and specific-share identification for mutual fund cost basis reporting. Learn which method minimizes taxes in different redemption scenarios.

Credit hedge fund A hedge fund strategy focused on trading bonds, loans, and credit derivatives to profit from credit-spread movements and credit-selection skill.

Crossover Fund A fund that simultaneously holds both private and public securities, blending illiquid and liquid assets to capture returns across market cycles.

Cryptocurrency ETF Exchange-traded funds providing regulated exposure to digital assets, covering spot and futures-based structures.

Currency-Hedged ETF An international ETF that uses rolling forward contracts to neutralize exchange-rate fluctuations for domestic investors.

Currency-Hedged Fund International fund that removes foreign-exchange exposure so investors capture only local-market returns in the fund's home currency.

Deal-by-Deal Carry vs Whole-Fund Carry in Private Equity Deal-by-deal carry vs whole-fund carry: whether GPs take profits per exit or split them globally; LPs prefer whole-fund because it aligns risk.

Deal-by-Deal vs Whole-Fund Carry: How Carry Timing Affects LPs Understand how deal-by-deal and whole-fund carry structures affect when managers receive carried interest and how returns are distributed to limited partners.

Defensive ETF An ETF that emphasizes stable, lower-volatility stocks and focuses on capital preservation and dividend income rather than growth.

Defined Outcome ETF A product category that delivers engineered return profiles — buffers, floors, or caps — via embedded options over set periods.

Defined Outcome Fund Buffer and Cap Mechanics A defined outcome fund sets a downside buffer and upside cap for a one-year outcome period, capping losses and gains in exchange for lower fees and predictable boundaries.

Dilution Levy A charge applied by mutual funds to large subscriptions or redemptions to protect remaining shareholders from transaction-cost dilution.

Distressed Debt Fund A distressed debt fund is a private investment vehicle that buys the debt of struggling companies at steep discounts, then profits from restructuring or recovery. Distressed debt offers high yields but with substantial risk.

Distressed Debt Hedge Fund Strategy Buying deeply discounted debt of troubled companies to profit from reorganization or turnaround outcomes.

Distribution Waterfall The sequence in which PE fund exit proceeds flow to LPs and the GP, prioritizing return-of-capital, preferred return, catch-up, and carry.

Dividend Appreciation Fund A mutual fund or ETF that invests in stocks with histories of rising dividend payments, targeting capital appreciation and growing income.

Dividend Aristocrats Fund A mutual fund or ETF focused on companies with long histories of consecutive annual dividend increases, favoring mature, stable businesses.

Dividend Distribution Payments of dividends or interest earned by a mutual fund that are distributed to shareholders, typically quarterly or annually.

Dividend Reinvestment in Mutual Funds An election to automatically reinvest fund distributions into additional shares at net asset value, compounding returns without incurring sales loads.

Dividend-Focused ETF An ETF explicitly designed to maximize or target dividend income from stocks, selecting companies based on their dividend yield and payout history.

Dollar-Cost Averaging With Automatic Mutual Fund Investments How automatic recurring investments into a mutual fund implement dollar-cost averaging, smoothing entry-point risk over time.

DPI (Distributions to Paid-In) in Private Equity DPI measures realized returns in private equity as cash distributions divided by capital paid in; a reality check on fund performance.

DPI, RVPI, and TVPI: Private Equity Return Multiples Explained DPI, RVPI, and TVPI are the three standard return multiples in private equity, measuring cash distributions, unrealized gains, and total value to invested capital.

Dry Powder Uncommitted capital sitting in private equity funds that represents latent buying power used to fund add-on acquisitions, exploit market downturns, and shape deal activity and valuations.

Dynamic Asset Allocation Fund Fund that continuously adjusts equity, bond, and cash weightings based on valuation, momentum, or macroeconomic signals.

Economics of Co-Investments in Private Equity Co-investment economics in private equity: how reduced fees and carry structures differ from main fund, and selection-bias risks for LP investors.

Emerging Hedge Fund Manager A hedge fund in its first two years of operation, facing capital constraints, track record gaps, and operational scaling challenges.

Emerging Markets Equity Fund Fund investing in stocks of companies in developing economies with lower per-capita income and higher growth potential.

Emerging Markets Fund An emerging markets fund is an ETF or mutual fund that invests in stocks of fast-growing developing countries like China, India, Brazil, and Mexico. Emerging markets funds offer higher growth potential but with higher volatility and political risk.

Endowment Model Fund: Can Retail Investors Access It Explains the endowment-style allocation strategy and how interval funds and multi-alternative structures attempt to bring it to retail investors.

Environmental Fund A thematic fund concentrated in clean energy, water treatment, and pollution control companies as a sector bet on environmental demand.

Equal-Weight ETF An ETF assigning identical portfolio weight to every constituent, creating a size-neutral alternative to market-cap indexing.

Equity Bridge Financing in Private Equity Buyouts Equity bridge financing lets PE GPs fund a deal before LPs are called for capital, deferring commitments and disguising true IRR timing.

Equity ETF An equity ETF is a pooled investment vehicle that holds a basket of stocks, trading on an exchange like an individual share. Equity ETFs are the most common form of index-based stock ownership for individual investors.

Equity Income Fund A stock fund that prioritizes high dividend-yielding companies, targeting current income over capital appreciation.

Equity Long-Bias Hedge Fund Hedge funds maintaining a net-long equity position while using short sales tactically for hedging and alpha generation, capturing upside while dampening downside swings.

ESG Impact Fund A fund that targets measurable environmental or social outcomes alongside financial returns, selecting and monitoring investments by their demonstrated impact.

ESG Mutual Fund A mutual fund that applies environmental, social, and governance screens to select or exclude holdings based on non-financial criteria.

ETF (exchange-traded fund) An ETF is a pooled investment fund that trades on a stock exchange like a stock. ETFs typically track a published index, maintain a price close to their net asset value through creation and redemption, and offer lower costs than mutual funds.

ETF Arbitrage ETF arbitrage is the profit opportunity when an ETF's market price diverges from its underlying NAV. Authorized participants exploit these gaps by simultaneously buying one asset and selling the other, keeping ETF prices efficient.

ETF Basket The daily published list of securities and their weightings used for in-kind creations and redemptions of ETF shares.

ETF Bid-Ask Spread An ETF's bid-ask spread is the difference between the highest price a buyer will pay (bid) and the lowest price a seller will accept (ask). The spread is typically 0.01%–0.05% for large ETFs, representing the cost of a single trade.

ETF Capital Gains Distribution Why ETFs rarely distribute taxable capital gains to shareholders, despite active trading, and how they achieve this structural advantage over mutual funds.

ETF Cash Creation A redemption mechanism where cash substitutes for securities, typically used by derivatives-heavy ETFs that cannot deliver standard security baskets.

ETF Closure Risk The risk that an ETF sponsor liquidates a fund due to poor performance or low assets, and what happens to your shares when it does.

ETF Collateral Swap The mechanism in funded swap ETFs where collateral assets substitute for direct index exposure via a counterparty agreement.

ETF Creation and Redemption ETF creation and redemption is the mechanism that lets authorized participants exchange baskets of stocks for new ETF shares, or ETF shares for baskets of stocks. This process keeps ETF prices in line with NAV and enables tax efficiency.

ETF Creation Unit The minimum basket of securities an authorized participant assembles to create new ETF shares directly from the fund.

ETF Creation-Redemption Mechanism and Its Effect on Fund Costs ETF creation and redemption let authorized participants exchange in-kind baskets of securities, keeping operating costs lower than mutual funds.

ETF Custodian A bank or trust company that holds an ETF's underlying securities in safekeeping, ensuring assets are segregated, protected, and available for trading and redemptions.

ETF Distribution Strategy How ETF managers decide whether, when, and how much to distribute as dividends or other taxable income to shareholders.

ETF Distribution Yield vs SEC Yield Understand the difference between ETF distribution yield and SEC yield, and which metric predicts future income more accurately.

ETF Dividend Reinvestment ETF dividends are reinvested automatically via DRIP if elected, with brokerage handling timing and reinvestment mechanics. Key differences from mutual funds.

ETF Dividend Taxation: Qualified vs Ordinary ETF dividends are taxed as qualified or ordinary income depending on holding period and dividend source; understand the tax treatment and strategies to minimize tax drag.

ETF Fractional Shares: Mechanics and Broker Support How brokers handle fractional ETF shares, dividend proration, and restrictions on transferring partial positions.

ETF Heartbeat Trade A coordinated creation-redemption cycle that flushes embedded capital gains from an ETF, allowing the fund to reset its cost basis without triggering shareholder tax.

ETF In-Kind Redemption Tax Advantage Explained How ETFs achieve tax efficiency through in-kind redemption mechanisms that let managers distribute low-basis stock without triggering taxable events for shareholders.

ETF In-Kind Transfer The exchange of securities rather than cash during ETF creation and redemption, preserving tax efficiency by avoiding realised capital gains.

ETF Inception Date The date an ETF was created and began offering shares to investors, indicating the fund's track record length and historical performance availability.