Funds

Inverse ETF An inverse ETF is designed to profit when an index falls. A 1x inverse ETF gains 1% when the S&P 500 falls 1%; a 3x inverse ETF aims to gain 3% per percentage point the index falls.

Inverse Volatility Fund A fund that profits when market volatility declines, selling downside protection.

Investing in ETFs with a Small Account How fractional shares, commissions, and bid-ask spreads affect ETF investing with a small account—and the minimum amount that makes sense.

J-Curve Effect in Private Equity Why private equity fund returns begin deeply negative due to fees and unrealised losses, then curve upward steeply once investments mature and generate exits.

Key Person Clause in Private Equity Funds A key person clause suspends new private equity fund investments when a named executive departs, protecting LPs from drift and allowing them to redeem or renegotiate terms.

Key Sections of a Fund Prospectus A fund prospectus discloses fees, principal risks, investment strategy, and portfolio manager tenure. Learn what to read and what to skip.

Letter of Intent A signed commitment to invest a specified sum over time to qualify immediately for breakpoint discounts on mutual fund purchases.

Leveraged Buyout Fund A leveraged buyout (LBO) fund is a private equity fund that acquires companies using significant debt financing. LBOs aim to improve operations and exit via sale or IPO, with returns amplified by leverage.

Leveraged ETF A leveraged ETF is a fund designed to deliver multiples of the daily return of an index, using derivatives and debt. A 2x leveraged ETF aims to return 200% of the daily index movement; a 3x leveraged ETF aims for 300%.

Leveraged ETF Decay: How Daily Rebalancing Erodes Returns Leveraged ETF decay refers to volatility drag that causes 2x and 3x leveraged funds to underperform their target index multiplier over holding periods longer than one day due to daily rebalancing.

Life Settlement Fund Funds that buy existing life insurance policies at a discount and hold them until insured death, collecting the benefit as investment returns.

Lifecycle Fund A lifecycle fund is a mutual fund or ETF that automatically adjusts its stock/bond allocation based on the investor's age or retirement timeline. Lifecycle funds are similar to target-date funds but often more flexible in design.

Limitations of Mutual Fund Star Ratings Why backward-looking star ratings are poor predictors of future performance and how investors commonly misuse them when selecting mutual funds.

Liquid Alternative Fund Explained A liquid alternative fund packages hedge-fund-style strategies inside a daily-liquid mutual fund or ETF, offering portfolio diversification without lock-up periods.

Litigation Finance Fund A litigation finance fund invests capital in third-party litigation or law firm advances, sharing in settlement or judgment proceeds, with returns driven by case outcomes.

Load Versus No-Load Funds The difference between mutual funds that charge upfront or deferred sales commissions and those without sales charges.

Load vs No-Load Fund Costs Load vs no-load fund costs: understand front-end loads, back-end loads, level loads, and how each affects your returns over different holding periods.

Long-Short Equity Fund A mutual fund or registered investment vehicle that holds both long stock positions and short positions, aiming to reduce overall market exposure and generate returns independent of market direction.

Managed Futures Fund A fund employing trend-following strategies across equities, bonds, commodities, and currencies, accessible to retail investors through liquid vehicles.

Managed futures hedge fund A hedge fund strategy that uses trend-following and momentum models to trade futures contracts across multiple asset classes and markets.

Management Fee A management fee is a flat annual percentage charge that a fund manager levies on assets under management. A management fee of 1% means the fund charges $1,000 per year for every $100,000 invested, regardless of fund performance.

Management Fee Offset in Private Equity How monitoring fees, transaction fees, and board fees paid to GPs are credited against management fee charges in private equity funds.

Management Fee Offset in Private Equity How portfolio company monitoring and transaction fees credited to GPs reduce the effective management fees LPs pay on private equity funds.

Master-Feeder Fund A two-tiered fund structure where multiple feeder funds pool capital into a single master fund for unified portfolio management and operational efficiency.

Master-Feeder Fund Structure Multiple feeder funds pooling capital into a single master fund for unified portfolio management and operational efficiency.

Maximum Drawdown as a Fund Risk Metric Maximum drawdown is the largest peak-to-trough decline a fund experiences. Unlike volatility, it captures tail risk and the emotional cost of losses.

Merger Arbitrage Profiting from the price gap between an acquisition target's market price and the deal consideration.

Merger Arbitrage Fund Fund that captures deal spreads by buying acquisition targets and shorting acquirers while waiting for merger completion.

Mezzanine Fund Investment funds that deploy subordinated debt with equity upside (warrants or conversion rights) to bridge the gap between senior debt and equity.

Micro-Cap ETF An ETF that holds stocks of very small companies with market capitalizations under $300 million, offering high growth potential but significant volatility and liquidity risk.

Micro-Cap Fund vs Small-Cap Fund Compare micro-cap funds and small-cap funds: liquidity, costs, volatility, and index overlap in specialty equity investing.

Money Market Fund A money market fund is a mutual fund that invests in short-term, low-risk securities like Treasury bills, commercial paper, and certificates of deposit. Money market funds aim to preserve capital while earning a small yield.

Money Market Mutual Fund vs High-Yield Savings Account Comparing safety, yield, liquidity, and insurance coverage between money market mutual funds and savings accounts for parking cash.

Multi-Alternative Fund A registered mutual fund that combines multiple liquid-alternative strategies—such as merger arbitrage, managed futures, and long-short equity—in a single portfolio to diversify return sources.

Multi-Asset ETF An ETF that holds a diversified mix of stocks, bonds, commodities, and other asset classes in a single fund, targeting a specific risk level or time horizon.

Multi-Manager Fund A single fund that allocates capital to several independent sub-advisers with different strategies, designed to diversify manager risk and blend investment approaches.

Multi-strategy hedge fund A hedge fund that combines multiple trading strategies across different asset classes and approaches, diversifying risk and capturing opportunities across market regimes.

Multi-Strategy Hedge Fund vs Fund of Funds How a single multi-strategy hedge fund internally allocates capital differs from a fund-of-funds structure, affecting fees, transparency, and manager selection risk.

Municipal Bond Fund A mutual fund investing in state and local government debt to deliver federally tax-exempt income, often favoured by high-income earners.

Mutual fund A mutual fund is a pooled investment vehicle that collects money from many investors, buys a portfolio of securities, and divides ownership through shares. Funds price once a day at net asset value and trade off-exchange, either actively managed or passive.

Mutual Fund 12b-1 Fee Explained A 12b-1 fee is an annual marketing and distribution charge embedded in mutual fund expense ratios; it typically ranges from 0.25% to 1% and covers advertising, commissions, and shareholder servicing.

Mutual Fund Minimum Investment Requirements Understand minimum investment to buy a mutual fund—from initial deposits to share class rules, and how automatic plans lower the barrier to entry.

Mutual Fund Redemption Fee Mutual fund redemption fees penalize rapid exits, distinct from load charges; both reduce net proceeds when you sell shares.

Mutual Fund Share Classes Different versions of the same mutual fund offered to different investor types, with varying fees and sales charges.

Mutual Fund Short-Term Redemption Window How 30-to-90-day holding periods trigger redemption fees, how funds track your purchase lots, and strategies to avoid the charge.

Mutual Fund Soft Close vs Hard Close A mutual fund soft close bars new investors but allows existing shareholders to add; a hard close halts all new purchases, protecting fund performance.

Mutual Fund Supermarket Explained Learn how brokerage platforms aggregate thousands of mutual funds from competing families, how no-transaction-fee deals work, and the hidden costs.

Mutual Fund vs ETF in a Taxable Account Mutual fund vs ETF in taxable accounts: how in-kind redemptions, capital gains distributions, and trading mechanics affect after-tax returns.

Mutual Fund Window in a 401(k): How It Works What a brokerage or mutual fund window in a 401(k) plan is, which funds become accessible, and what costs and risks plan members should consider before using one.

Mutual Funds for the Self-Employed: SEP-IRA and Solo 401(k) Choices Self-employed workers can use mutual funds inside SEP-IRAs and Solo 401(k)s to hold diversified, tax-deferred portfolios with contribution limits up to $69,000+ annually.

Net Asset Value The per-share value of a mutual fund, calculated as total assets minus liabilities divided by the number of outstanding shares.

Net IRR vs Gross IRR in Private Equity Net IRR vs gross IRR explains how management fees, carry, and expenses cut portfolio returns; LPs earn net, GPs report gross.

No-Fault Divorce Clause in Private Equity Fund LPAs What a no-fault divorce clause is in PE fund agreements, how LP supermajorities use it to remove a GP without cause, and typical vote thresholds.

Omnibus Account A brokerage or intermediary account that aggregates holdings from multiple beneficiaries under a single beneficial owner, masking individual investor identities from the fund.

Open-End Fund An open-end fund is a mutual fund that continuously issues and redeems shares at net asset value (NAV). Open-end funds form the foundation of the mutual fund industry and are the technical category that includes most traditional mutual funds.

Open-End vs Closed-End Fund The structural differences between open-end and closed-end funds: how shares are created, what determines pricing, and why closed-end funds can trade at premiums or discounts.

Open-End vs Closed-End Fund Economics How fee structures, liquidity terms, and capital recycling differ fundamentally between open-ended and closed-ended fund vehicles.

Option Income Fund: How It Works An option income fund systematically sells covered calls and cash-secured puts to generate premium income, with returns driven by time decay and management skill.

Passively Managed Fund A mutual fund that tracks a market index with minimal trading, aiming to match benchmark returns at low cost.

PE Commitment vs Capital Contribution: What Investors Actually Pay Understand the difference between committed capital and drawn-down contributions in private equity funds, and how capital calls work.