Lecture Overview:

• Investment companies
• Portfolio performance evaluation
• Performance of mutual funds
• Market timing

Investment Companies

Investment companies

• Pooling and collective investment of investors’ money
• Investors hold fractional shares in the underlying portfolio
• Benefits of diversification and transaction cost saving
• Professional management
• “institutional/professional/skilled investors”

Mutual funds

• Open-end funds
• Equity funds, bond funds, index funds...

ETFs

• Closed-end funds
• Tracks market index
• Allows investors to trade index portfolios like normal stocks