Exam Weight: ~5 questions (4% of exam)
Pooled investments let multiple investors combine their money into a single portfolio, often managed by professionals. This unit covers the types of pooled investment vehicles, their legal requirements, and how they differ from each other. The next unit covers how these investments are priced, the fees investors pay, and how to evaluate them.
Why do you need to know this? Pooled investments are the primary vehicles most clients use to access diversified portfolios. Understanding the legal structures, registration requirements, and distinguishing features helps you select appropriate vehicles for client needs and comply with the regulations governing each type.
What You'll Learn
- Mutual funds: open-end funds, closed-end funds, and the Investment Company Act framework
- Private funds: hedge funds, private equity, venture capital, and fund exemptions
- Unit Investment Trusts (UITs): fixed portfolios with no active management
- Exchange-Traded Funds (ETFs): features, arbitrage mechanism, and comparison with mutual funds
- Real Estate Investment Trusts (REITs): types, trading tiers, and the 75/75/90 rule
- Synthesis: Putting pooled investment concepts together