Stocks, Commodities & Forex Trading

Funds

Mutual Funds

Mutual funds used to be popular investment vehicles for private individuals who wish to have professional fund managers to manage their assets.  A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests typically in investment securities (stocks, bonds, short-term money market instruments, other mutual funds, other securities, and/or commodities such as precious metals).

Hedge Funds

A hedge fund is an investment fund open to a limited range of investors that undertakes a wider range of investment and trading activities than traditional long-only investment funds, and that, in general, pays a performance fee to its investment manager. Every hedge fund has its own investment strategy that determines the type of investments and the methods of investment it undertakes. Hedge funds, as a class, invest in a broad range of investments including shares, debt and commodities.

In the United States, hedge funds may avoid the typical regulations for investment companies because of exceptions in the laws. The two major exemptions are set forth in Sections 3(c)1 and 3(c)7 of the Investment Company Act of 1940. Those exemptions are for funds with 100 or fewer investors (a "3(c) 1 Fund") and funds where the investors are "qualified purchasers" (a "3(c) 7 Fund"). A qualified purchaser is an individual with over US$5,000,000 in investment assets.  A 3(c)1 Fund cannot have more than 100 investors, while a 3(c)7 Fund can have an unlimited number of investors. The Securities Act of 1933 disclosure requirements apply only if the company seeks funds from the general public, and the quarterly reporting requirements of the Securities Exchange Act of 1934 are only required if the fund has more than 499 investors. A 3(c)7 fund with more than 499 investors must register its securities with the SEC.

Pension Funds

Pension funds are plans, funds, or programs which provide retirement income to employees or results in a deferral of income by employees.

Pension funds are increasingly becoming important shareholders of listed and private companies. They are especially important to the stock market where large pension fund institutional investors dominate. Pension fund is currently the largest category of investors ahead of mutual funds, insurance companies, currency reserves, sovereign wealth funds, hedge funds, or private equity.

Exchange Traded Funds (EFTs)

Exchange-traded funds (ETFs) are investment funds traded on stock exchanges, much like stocks. An ETF holds assets such as stocks or bonds and trades at approximately the same price as the net asset value of its underlying assets over the course of the trading day.

An ETF combines the valuation feature of a mutual fund or unit investment trust, which can be bought or sold at the end of each trading day for its net asset value, with the tradability feature of a closed-end fund, which trades throughout the trading day at prices that may be more or less than its net asset value.