Bài giảng Pfin4 - Chapter 13: Investing in Mutual Funds, ETFs and Real Estate

PFIN4Investing in Mutual Funds, ETFs and Real Estate13Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. GITMAN/ JOEHNK/ BILLINGSLEY*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Describe basic features and operating characteristics of a mutual funds and exchange traded fundsDifferentiate between open- and closed-end mutual funds as well as exchange traded funds, and discuss the various types of fund loads and chargesDiscuss types of funds available to investors and the different kinds of investors services offered by mutual funds and exchange traded fundsLEARNING OUTCOMESPFIN4 | CH13*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Gain an understanding of the variables that should be considered when selecting funds for investment purposes Identify the sources of return and calculate rate of return earned on an investment in a mutual fund as well as evaluate the performance of an exchange traded fundUnderstand the role that real estate plays in a diversified investment portfolio along with basics of investing in real estate, either directly or indirectlyLEARNING OUTCOMES (continued)PFIN4 | CH13Mutual Funds and Traded Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Mutual fundFinancial services organization that receives money from its shareholdersInvests funds in a diversified portfolio of securitiesExchange traded fund (ETF)Investment company whose shares trade on stock exchangesShares can be bought and sold throughout the dayPFIN4 | CH13Exhibit 13.1*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Basic Mutual Fund StructureReasons for Investing in Mutual Funds or ETFs*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Achieve diversification in the investment holdingsObtain services of professional money managers Pooled diversification: Investors buy into a diversified portfolio of securities for the collective benefit of individual investors Generate rate of return on the investment capital Offer conveniencePFIN4 | CH13How Mutual Funds are Organized and Run*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Management company - Runs daily operationsInvestment advisor - Oversees portfolioDistributor - Sells the fund shares Custodian - Safeguards the securities and other fund assetsTransfer agent - Executes transactions and maintains other recordsPFIN4 | CH13Open-End versus Closed-End Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Open-end investment companyIssues unlimited number of shares that it buys and sells at a price based on the current market value of the securities Net asset value (NAV): Current market value of all the securities the fund owns, less liabilities, on a per-share basis Closed-end investment companyIssues a fixed number of shares which are themselves listed and traded share of stockPFIN4 | CH13ETFs*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Structured as index fundsOffer professional money management of mutual fundsProvide liquidity of an exchange traded stockDistributors can create new shares or redeem old sharesContain higher costs, portfolio turnover and taxes when managed activelyImportant Cost Considerations*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Load fund: Charges a fee at purchaseLow: Consists a low purchase feeBack-end: Commission charged for redeeming fund sharesNo-load fund: Involves no transaction fees chargedImportant Cost Considerations*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH1312(b)-1 Fee: Annual fee used to offset the promotion and selling expensesManagement fee: Paid to the professional money managers who administer a mutual fund’s portfolioTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13GrowthAims for capital appreciationInvolves risk exposureViewed as long-term investment vehiclesAggressive growthHighly speculative investment vehiclesSeek large profits from capital gainsVolatile in natureTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13ValueInvest in stocks that are considered to be undervalued by the marketEquity-IncomeEmphasize current incomeAim to preserve the capitalViewed as low-risk way of investing in stocksTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13BalancedHold a balanced portfolio of stocks and bondsGenerate well-balanced return of current income and long-term capital gainsConfine investing to high-grade securitiesGrowth-and-IncomeConfine investing to high-quality issuesInvolve risk due to their emphasis on stocks and capital gainsTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13BondInvest in various kinds of fixed-income securitiesAdvantagesMore liquidOffer a cost-effective way of achieving a high degree of diversification Automatically reinvest interest and other incomeTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13IndexBuys and holds a portfolio of stocks equivalent to those in a market indexSectorRestricts investments to particular sector of the marketTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Money marketGeneral purpose: Invests in virtually any type of short-term investment vehicleTax-exempt: Limits its investments to short-term, tax-exempt municipal securitiesGovernment securities: Limits its investments to short-term securities of the U.S. government and its agenciesTypes of Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Socially responsible: Invest only in companies meeting social, ethical, and/or environmental criteriaInternational fund: Invest in foreign securitiesAsset allocationSpread investors’ money across all different types of markets Services Offered by Mutual Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Services Offered by Mutual Funds*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Selection Process for Making Mutual Fund and ETF Investments*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Identify objectives and motives for using fundsRecognize what funds have to offerEliminate the alternativesEvaluate funds investment performanceStick with no-load or low-load mutual fundsMeasuring Fund Performance*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Sources of returnDividend income Capital gains distributions Change in fund's share priceEvaluating ETF performanceReason for investing in an index based ETF is to replicate the performance of the indexDetermined by R-Squared statistical measureBasic Considerations of Investing in Real Estate*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Factors affecting the value of real estate investmentsCash flow and taxesAppreciation in valueUse of leverageSpeculating in Raw Land*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Investors seek to generate high rates of return by investing in a property hoping it will increase in valueInvolves high riskInvesting in Income Property*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Income-producing propertyPurchased for renting to generate periodic income in the form of rent receipts Commercial propertiesOffice buildings, industrial space, and warehouses to retail space and hotels Risk and returns are tied to business conditions and location Investing in Income Property*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Residential propertiesHomes, apartments, and smaller multifamily buildingsProfitability is influenced by the occupancy ratesOther factors to be consideredLocationLocal regulations Supply and demand trendsOther Ways to Invest in Real Estate*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Real estate investment trust (REIT)Accumulates money, by selling shares to investors to invest in various forms of real estate TypesEquityMortgageHybridOther Ways to Invest in Real Estate*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. PFIN4 | CH13Limited partnerships (LPs)Managers assume the role of general partner with unlimited liability Other investors are limited partners legally liable only for the amount of their initial investmentLimited liability companies (LLCs)Includes a managing member and other members without any liability*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Mutual fundExchange traded fund (ETF)Pooled diversificationOpen-end investment companyNet asset value (NAV)Closed-end investment companyLoad fundLow-load fundBack-end load fundKEY TERMSNo-load fund 12(b)-1 feeManagement feeGeneral-purpose money fundTax-exempt money fundGovernment securities money fund Socially responsible fund (SRF)International fund PFIN4 | CH13*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. Automatic investment planAutomatic reinvestment planSystematic withdrawal planConversion (or exchange) privilegeIncome-producing propertyReal estate investment trust (REIT)KEY TERMSPFIN4 | CH13*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYMutual funds are invested in a diversified portfolio of securitiesETF shares are traded on stock exchangesOpen-end investment companies issue unlimited number of shares at a price based on the current market value of the securities Closed-end investment companies issue a fixed number of shares which are listed and traded PFIN4 | CH13*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYTypes of fundsGrowth, aggressive growth, value, equity-income, balanced, growth-and-income, bond, money market mutual funds, index, sector, socially responsible, international, and asset allocation Variables to be considered while making mutual funds and ETF investmentsIdentify objectives and motives for using funds, recognize what the funds have to offer, eliminate the alternatives, and stick with no-load or low-load mutual fundsPFIN4 | CH13*Copyright ©2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part. SUMMARYSources of returnDividend income, capital gains distributions, and change in fund's share priceFactors that affect the value of real estate investmentsCash flow and taxesAppreciation in valueUse of leveragePFIN4 | CH13