AAA-rated bonds

, 133

Accredited investors

, 157–158

Acquisition

ease and cost of

, 160–161

property

, 177

Active investing

, 48–49

Active management

, 59, 89

Active portfolio management

, 48–49, 133–134

Actively managed mutual funds

, 15–16, 48, 59, 122–123

Activist investors

, 112

Adjusted funds from operations (AFFO)

, 167

Aftermarket (see Secondary market)

Agency bonds

, 101

All-Star Growth (ASG)

, 105

Allianz NFJ Dividend Interest & Premium Strategy Fund

, 94

Alpha

, 34–35

Alternative asset(s)

classes

, 71

and strategies

, 95–96

Alternative funds

, 14–15

Alternative investments

, 71–72

Amana Income fund

, 18

American Balanced Fund

, 24

American Realty Trust

, 149

American Stock Exchange (AMEX)

, 51, 94

American Tower

, 154–155

Annaly Capital Management

, 155

Annual account maintenance fee

, 25

Annual expenses

, 129–130

Annual fund operating expenses

, 25

Arbitrage

, 55

Ask price

, 67–68, 108

Asset(s)

class

, 31, 52, 63

types and quality of

, 170–171

Assets under management (AUM)

, 2, 51, 79, 84, 118

Attractive investment

, 60–61

Authorized participant (AP)

, 53–54, 90

Automatic dividend reinvestment

, 97

Awareness

, 61

Back-end load (see Deferred sales charge)

Balanced funds

, 13, 22

Bank loan funds

, 14–15

Barron’s

, 114, 137

Behavioral biases

, 113

Benchmark

, 31, 33–36, 42, 48–49, 56, 80, 89–90

Beta

, 32, 35

smart beta ETF

, 52

Bid price

, 67

Billboards

, 159

BlackRock, Inc.

, 103

Blue-chip stocks

, 9

Bogle, John C. “Jack”

, 47

Bond(s)

, 13

AAA-rated

, 133

agency

, 101

convertible

, 101

corporate

, 101

domestic municipal

, 99

domestic taxable

, 101–102

funds

, 12–13

global/international bond CEFs

, 102

international bond UITs

, 131

investment-grade corporate

, 101

municipal

, 99

PIMCO concentration on

, 103

yield on

, 134

Boston Personal Property Trust

, 84

Breakpoints

, 136

British investment trusts

, 84

Broad-based index ETFs

, 78

Business development companies (BDCs)

, 120

Businesses

, 166

model of REITs

, 152

Buy-and-hold strategy

, 28, 64, 119–120

Buying on margin

, 58–59

Call option

, 95

Call premium

, 95

Cap rate (see Capitalization rate)

Capital appreciation distribution

, 41

Capital gains

, 5

Capitalization

, 50

equity market

, 177

market

, 21–22, 50, 107

mid-size

, 22

rate

, 168

small-size

, 22

Cash

, 13

distribution

, 141

flow generation

, 97

liquidation

, 141

Cell tower companies

, 159

Certificates of deposit (CDs)

, 12

Charles Schwab

, 21, 50, 55, 68

Chicago Mercantile Exchange (CME)

, 51

Closed-End Fund Association

, 104, 114

Closed-end funds (CEFs) (see also Exchange-traded funds (ETFs))

, 3, 49, 64, 83–84, 105, 118, 123–126, 159

benefits

, 85

common shares

, 86

comparing market prices of CEFs to stocks

, 110–112

demand

, 92–94

disadvantages or drawbacks

, 97–98

vs. exchange-traded funds (ETFs)

, 90–92

fee structure

, 106

investments

, 92–94

investors

, 94–97

largest

, 102, 103

managers

, 88

management

, 102–103

vs. mutual fund

, 87–90

owners of

, 93

performance evaluation

, 106–108

prices

, 91

regulation

, 113

resources for gaining additional information about

, 114–115

risks associated with investing in

, 103–105

security types

, 113–114

selection criteria

, 108–110

trade at different value from their NAVs

, 112–113

types

, 98–102

working

, 85–86

year-end total assets and total number of

, 93

Closed-end REIT

, 151

Closet index fund

, 42

Cohen and Steers on real estate

, 103

Collateral arrangement

, 56

Commodity ETFs

, 72

Commodity Exchange Act

, 37

Competitive long-term performance

, 162–163

Complexity risk

, 73–74

Compound annual growth rate (CAGR)

, 7

Concentration risk

, 28

Consistent asset base

, 96

Consumer Price Index (CPI)

, 163

Contingent deferred sales charge

, 24

Convenience

, 94

Conventional wisdom

, 175

Convertible bonds

, 101

Corporate

bonds

, 101

governance

, 163

unit UITs

, 131

Cost(s)

, 10, 21

associated with owning mutual funds

, 23–26, 142–144

effectiveness

, 8

REIT

, 164

Counterparty risk

, 56

Country risk

, 14, 23

Coverage ratio

, 168–169

Covered call strategy

, 95

Credit rating

, 135

Credit risk

, 13, 27, 130

Currency ETF

, 72

Currency risk

, 131

Data centers

, 159

Debenture

, 88–89

Debt ratio

, 168

Deferred sales charge

, 24, 142–143

Deferred tax

, 154

Defined contribution (DC)

, 6–7

Demand

for CEFs

, 92–94

for ETFs

, 60

for mutual funds

, 6–7

Depositors

, 120

Discounts

, 94, 112–113

opportunity to buy shares at

, 94

volume

, 136

Distributions

, 105

capital appreciation

, 41

cash

, 141

dividend

, 153

in-kind

, 129

income potential and

, 122–123

rate

, 108

(12b-1) fees

, 25–26

Diversifiable risk (see Unsystematic risk)

Diversification

, 9, 20, 62–63, 71, 95, 122, 126–127

lack of

, 165

level of

, 171–172

Dividend

capture strategy

, 96

distributions

, 153

payments

, 41

REIT

, 173

sales charge (load) on reinvested

, 24

yield

, 169

Dividend reinvestment program (DRIP)

, 60, 97

Dividends.com

, 179–180

Dollar cost averaging

, 28

Domestic equity

, 99–100

Domestic municipal bond

, 99

Domestic taxable bond

, 101–102

Double taxation

, 152

Dow Jones Industrial Average (DJIA)

, 78

E*Trade

, 50

Earnings before interest, taxes, depreciation, and amortization (EBITDA)

, 169

Earnings per share (EPS)

, 165–166

Environmental, social, and governance (ESG)

, 17

Environmental behavior

, 17

Equity

, 71

CEFs

, 101

funds

, 13

income

, 120, 122

trusts

, 131

unit UITs

, 132

Equity REITs (eREITs)

, 154–155, 160, 170–173, 176

Equity Residential (EQR)

, 155

Euro Currency Trust

, 72

Evaluator

, 121

Ex-dividend date

, 96

Excessive cash holdings

, 11

Exchange

, 55

fee

, 25

rate risk

, 14

Exchange-traded funds (ETFs) (see also Closed-end Funds (CEFs); Mutual funds)

, 1, 48–50, 69–70, 83, 90, 120, 123–126, 149

advantages/benefits offered to investors

, 62–65

average performance

, 65–66

creation/redemption process

, 53–55

demand for

, 60

development

, 50–53

disadvantages/drawbacks of owning

, 67–69

evolving

, 51–53

factors contribution to ETF industry growth

, 60–61

financial investors

, 77–78

growth

, 83–84

indexing outmaneuver

, 66–67

individual investors

, 76–77

institutional investors

, 77

major ETF asset classes and categories

, 70–73

online resources for

, 81

vs. open-end mutual funds

, 57–60

risks associated with investing in

, 73–76

selection criteria of investors used before buying

, 78–81

sponsor

, 53

strategies for ETF sponsors

, 55–56

VFINX

, 47–48

Exchange-traded managed funds (ETMFs)

, 61

Expense ratio

, 62, 80, 132

Expenses

, 80, 88, 91, 110

Family offices

, 172

Federal Deposit Insurance Corporation (FDIC)

, 10

FDIC-insured

, 38

Federal government agency

, 101

Federal Home Loan Mortgage Corporation

, 101

Federal National Mortgage Association

, 101

Federal Reserve Board

, 111

Federal Reserve Regulation T

, 111

Fee

annual account maintenance

, 25

associated with owning mutual funds

, 23–26

for CEFs

, 106

exchange

, 25

management/investment advisory

, 25

redemption

, 24, 143

REIT

, 164

shareholder

, 23–24

structure

, 5, 126

transaction

, 135

12b-1

, 25–26, 88

of unitholder

, 142

Fidelity Investments

, 16, 50

Fidelity Real Estate Investment (FRESX)

, 161

Financial advisors

, 77–78

Financial Industry Regulatory Authority (FINRA)

, 37, 142, 179

Financial market

, 2, 44, 54

Financial Times-Stock Exchange 100 index (FTSE 100 index)

, 56

Fixed deposit

, 9

Fixed income

, 120, 122

securities

, 71, 130

trusts

, 131

Flaherty & Crumrine on preferred stocks

, 103

Flexible reinvestment options

, 123

Foreign exchange

, 131

Foreign markets

, 102

FTSE NAREIT All Equity REITs

, 163, 169

FTSE NAREIT All REITs Index

, 174–175

FTSE NAREIT US Real Estate Index Series

, 173

Full replication

, 55–56, 69

Full-blown international banking crisis (see Global financial crisis)

Fund-O-Matic Fund Screener

, 43

Fund(s)

, 2

choosing between different types of

, 20–21

exchange

, 42

management

, 20

manager experience

, 133–134

public projects

, 131

shareholder services

, 26

shareholders

, 4

sponsor

, 4

type

, 109

Funds from operations (FFO)

, 166

Gains by closing gap

, 85

Global bond CEFs

, 102

Global equity CEFs

, 102

Global financial crisis

, 175

Global/international funds

, 13–14, 23

Governance, structure and

, 123, 126

Government agency

, 101

Government securities

, 101

Government-sponsored enterprise (GSE)

, 101

Great Depression

, 84

Growth-based funds

, 100

Growth funds

, 22

Growth strategy

, 132

Hebner, Mark (founder of Index Fund Advisors, Inc.)

, 65

Hedge (investments)

, 71

Higher potential volatility

, 104

Higher sales and management expenses

, 98

Households owning CEFs

, 93

Hybrid REITs (hREITs)

, 155, 171, 173

In-kind distribution

, 129

Income

equity

, 120, 122

fixed

, 120, 122

funds

, 12–13

funds

, 22

investors high yields

, 105

net

, 166

Income potential

attractive

, 96

and distribution

, 122–123

Indexfund

, 16, 47–48, 73

Indexing outmaneuver

, 66–67

Index trusts

, 132

Individual investors

, 76–77

Individual Retirement Accounts (IRAs)

, 6–7, 77, 119, 139–140, 173

Individual securities for trust

, 138

Inflation

, 136

protection from

, 134, 163

Information ratio

, 33–34

Initial public offering (IPO)

, 86, 90, 126, 138, 151

Initial sales charge

, 142

Institutional funds

, 1

Institutional investors

, 77, 157–158

Interest rate risk

, 13, 27, 130, 171, 175

Internal fund expenses

, 30–31

Internal Revenue Service (IRS)

, 140, 158

International bond

CEFs

, 102

UITs

, 131

International equity CEFs

, 102

International funds

, 13–14

International Index Fund

, 16

Intraday pricing

, 64

Intraday trading

, 88

liquidity

, 64

Intrinsic value

, 167

Inverse exchange-traded fund (IETF)

, 72–73

Invesco Developing Markets A fund

, 33

Investment Company Act (1940)

, 24, 37, 49, 84, 113, 126, 139, 141–142

Investment Company Fact Book

, 60

Investment Company Institute

, 6–7, 114

Investment(s)

, 7

advisory fees

, 25

companies market

, 118

decision-making process

, 17

horizon

, 133, 136–137

investment-grade corporate bonds

, 101

in mutual funds

, 28–30

objective

, 127, 132

risk

, 164

in socially responsible mutual funds

, 18–19

strategies

, 96, 133

in UITs

, 136–137

Investor(s)

, 1, 30–32

buy/sell/switch units of trust

, 137–138

buying and selling REIT

, 159–160

choosing between different types of funds

, 20–21

considering ETFs as part of investment portfolios

, 62–65

evaluating UIT’s performance

, 134–136

individual

, 76–77

making money from investing in mutual funds

, 41

mutual funds availability to

, 12–15

options available when trust matures

, 140–141

owning CEFs

, 94–97

owning mutual funds

, 7–10

protection

, 10

selection criteria

, 78–81, 132–134

sentiment

, 94, 112, 113

services

, 109

unit investment trusts (UITs) and

, 126–128

Islamic principles

, 18

Issued shares

, 92

Kiplinger Mutual Fund Finder

, 43

Large-cap mutual funds

, 22

Law of one price

, 90

Leverage

, 89, 110, 168

ability to

, 97

dangers of

, 105

negative effects of

, 98

personal

, 111–112

ratio

, 107–108

Leveraged exchange-traded fund (LETF)

, 72–73

Liberty All-Star Growth CEF

, 107

Lifespan

, 122–123

Limit order

, 58, 111

Limited growth, REIT

, 165

Limited liability companies (LLCs)

, 100

“Lipper Leader”

, 36, 43

Lipper ratings

, 36

Liquidity of mutual funds

, 39

Liquidity

, 9, 79–80, 87, 108–109, 163

risk

, 27

Loads

, 23, 30

“Locked in” mortgage loans

, 155

Long-term strategies

, 85

Lower expense ratios

, 97, 127–128

Management

advisory fees

, 25

expertise

, 95

professional

, 8, 10, 163

quality

, 172

style

, 89–90

Manager’s incentive for exceptional performance

, 36

Margin

, 58

buying on

, 58–59

trading

, 111

Market

capitalization

, 21–22, 50, 107

exposure

, 62

index

, 32

order

, 110–111

risk

, 13, 26–27, 73, 128–129

strategy

, 132

timing strategy

, 29

Maryland, trusts or corporations in

, 151

Massachusetts Bay Colony

, 84

Massachusetts Hospital Life Insurance Company

, 84

Massachusetts Investors Trust

, 2

Master limited partnership funds (MLP funds)

, 100

MAXFund

, 43

Mean reversion

, 29

MFSA Investment Management

, 2

Micro-cap mutual funds

, 22

Mid-cap mutual funds

, 22

Mid-cap strategy

, 107

Minimum investment in mutual fund

, 11–12

Money market fund

, 6–7, 12

Moody’s rating

, 135

Morningstar

, 43, 59, 104, 109, 114

Mid-Cap Growth index

, 107

ratings

, 35

Morningstar.com

, 105

Mortgage REITs (mREITs)

, 155, 160, 170–173

Mortgage-backed securities (MBS)

, 155

UITs

, 131–132

Municipal bond

, 99

Mutual Fund Observer

, 44

Mutual fund(s)

, 1, 69–70, 84, 115, 118, 123–126

actively and passively managed

, 15–16

advantages of owning

, 7–10

choosing between different types of

, 20–21

classification based on portfolios

, 21–23

closed-end funds (CEFs) vs.

, 87–90

common questions before investing in

, 39–40

costs and fees associated with owning

, 23–26

demand for

, 6–7

disadvantages/drawbacks of owning

, 10–11

factors considered by investors when evaluating

, 30–32

and FDIC

, 38

international stocks and bonds, investing in

, 45

investing in

, 41

investment decisions

, 44

liquidity of

, 39

making money from investing in

, 41

manager’s incentive for exceptional performance

, 36

minimum investment in

, 11–12

online resources for

, 43–44

performance evaluation

, 32–36

potential strategies for investing in

, 28–30

prospectus

, 2–3

protection

, 38–39

regulations governing

, 37

risk and return profile

, 20–21

risk faced by investors of

, 26–28

vs. separately managed account (SMA)

, 4–6

socially responsible

, 18–19

SRI

, 16–17

traps

, 42

types of

, 12–15

NASDAQ

, 50, 61, 94, 137

National Association of Real Estate Investment Trusts (NAREIT)

, 154, 155, 163, 179

National Association Securities Dealers (NASD)

, 24

Net asset value (NAV)

, 3, 54, 84, 108, 138, 140, 159, 167

appreciation

, 41

pricing relative to

, 109

Net assets

, 144

Net income

, 166

Net operating income (NOI)

, 167

New Covenant Growth fund

, 18

New fund risk

, 75

New York Stock Exchange (NYSE)

, 50, 84, 156

No-cash holdings

, 122

No-load fund

, 25

Non-traded REIT

, 156–158

Nonprofessional investors

, 112–113

Nontraditional methods

, 71

Nuclear energy

, 19

Nuveen’s AMT-free Quality Municipal Bond Fund (NEA)

, 103

Occupancy rates

, 169

Online brokerage

, 50

Online resources

for ETFs

, 81

for mutual funds

, 43–44

for REITs

, 179–180

Open-end funds (OEFs)

, 1, 3, 87

Open-end mutual funds

, 57–60

Open-end REIT

, 151

Operating expenses

, 26, 143

Opportunity to buy shares at discount

, 94

Options contract

, 77

Outstanding shares

, 90

Over-the-counter market (OTC market)

, 76

Ownership

, 4–5

Passive investing

, 47

Passive management

, 90

Passive portfolio management

, 47

Passively managed mutual funds

, 15–16

Patience

, 21

Perceptions

, 112

Performance

, 20, 172

competitive long-term

, 162–163

history and potential

, 109–110

performance-weighted mutual fund strategy

, 29–30

REIT

, 173–175

relative to objective

, 107

Personal leverage

, 111

Personalized portfolios

, 61

Philadelphia Stock Exchange (PHLX)

, 51

Physical replication

, 55–56

PIMCO concentrates on bonds

, 103

Political risk

, 14

Pooled investment vehicle (PIV)

, 1, 49, 85–87, 118, 122–125, 134, 150

Portfolio

diversification

, 161

feature

, 122–123

investor’s

, 178

mutual funds classified based on

, 21–23

personalized

, 61

self-liquidating

, 129

Predictable income stream

, 92

Preferred securities

, 89, 101–102

Preferred stock (see Preferred securities)

Premiums

, 94, 112–113

Prepayment risk

, 171

Presbyterian beliefs

, 18

Price-to-book (P/B)

, 165–166

Price-to-earnings (P/E)

, 165–166

ratio

, 29–30

Pricing

, 57, 89, 92, 108, 111

Private correctional facilities

, 159

Private REITs

, 157–160

Private-placement REIT (see Private REITs)

Professional management

, 8, 10, 163

Professional selection

, 127

Property yield

, 170

Prospectus

, 2–3, 86

Publicly traded and non-traded REITs

, 156–158

Real estate investment trusts (REITs)

, 100, 120, 147–150

advantages

, 160–163

business model

, 152

disadvantages or drawbacks

, 164–165

dividends

, 173

earnings

, 177

economic impact

, 177

forms of REIT distribution

, 153–154

general factors

, 170–172

interest rates affecting publicly traded REITs

, 175–176

investors

, 172–173

investors buying and selling

, 159–160

major sectors

, 158–159

making money on

, 160

metrics used to assess

, 166–170

online resources for

, 179–180

performance

, 173–175

publicly traded and non-traded

, 156–158

qualification as

, 152–153

questions investors should ask before investing in

, 178–179

shareholders

, 151

traditional metrics

, 165–166

types

, 154–155

in United States

, 149

working of

, 151–152

Real-time pricing

, 111–112

Redemption

fee

, 24, 143

process

, 54–55

Regulation

, 5

govern mutual funds

, 37

Residual risk (see Unsystematic risk)

Responsible investing

, 17

Retail investors

, 8, 55

Return

, 106–107

of capital

, 153

real return of return

, 136

Return on investment (ROI)

, 29

Rights offering

, 86

Risk(s)

, 164–165

complexity

, 73–74

concentration

, 28

counterparty

, 56

country

, 14, 23

credit

, 13, 27, 130

exchange rate

, 14

of individual CEFs

, 98

interest rate

, 13, 27, 130, 171, 175

with investing in ETFs

, 73–76

investment

, 164

liquidity

, 27

market

, 13, 26–27, 73, 128–129

new fund

, 75

political

, 14

prepayment

, 171

securities selection

, 130

selection

, 74

shutdown

, 75–76

tracking

, 75

trading

, 75

unsystematic

, 26–27

upside

, 27

Robo-advisors

, 61

Sales charge

, 24

(load) on reinvested dividends

, 24

Savvy investor

, 2

Secondary market

, 151

pricing

, 98

transaction

, 88

in trust units

, 138

UITs trade on

, 140

Sector funds

, 14

Securities Act (1933, 1934, 1940)

, 5, 37, 113, 139, 141

Securities and Exchange Commission (SEC)

, 5, 49, 86, 115, 119, 139, 156, 179

SEC-registered investment banks

, 120

Securities Exchange Act (1934)

, 113

Securities Insurance Protection Corporation (SIPC)

, 39

Security

liquidity

, 67

prices

, 26–27

selection risk

, 130

Selection risk

, 74

Self-liquidating portfolios

, 129

Senior loans

, 102

Separately managed account (SMA)

, 4–6

“Set-it-and-forget-it” investments

, 105

Shareholders

, 86, 92

fees

, 23–24

Sharpe ratio

, 32

Short selling

, 14–15, 58

Shutdown risk

, 75–76

Simplicity and convenience

, 8

Small-cap mutual funds

, 22

Smart beta ETF

, 51

Social behavior

, 17

Social screen

, 17

Socially responsible investing (SRI)

, 16–17, 19

Socially responsible mutual funds

, 17–19

Sortino ratio

, 33

Sovereign debt

, 102

SPDR S&P 500 ETF (SPY)

, 51, 53

Specialty fund

, 14

Specific risk (see Unsystematic risk)

Sponsors

, 120–121

Spread

, 67, 79

Stability

, 108

Standard & Poor’s Depository Receipts (SPDRs)

, 51

Standard and Poor’s 500 index (S&P 500 index)

, 50, 53, 55, 69, 74, 78, 89, 91

Standard deviation

, 32

Starwood Property Trust (STWD)

, 155

Stock funds

, 13

Stock market crash (1929)

, 118

Stop-loss order

, 58

Superior income generation

, 85

Supervisor

, 121

Swap

, 56

Synthetic replication

, 56

Systematic risk (see Market—risk)

Tactical trading

, 77

Tax(es)

, 10–11, 135–136, 162, 165

efficiency

, 59, 64, 128

liability

, 5

payments

, 41

purposes

, 153

rate

, 134

taxable income strategies

, 101

trap

, 42

UIT

, 139–140

Teachers Insurance and Annuity Association of America (TIAA)

, 11–12

Toronto Index Participation Shares (TIPs)

, 51

Toronto Stock Exchange (TSX)

, 51

Total Market Index Fund

, 16

Total returns

, 106–107

Track indexes

, 55–56

Tracking

difference

, 68–69, 79

error

, 33, 56

risk

, 75

Trading

, 57, 90

activity

, 51

risk

, 75

strategies

, 111

volume

, 108

Traditional metrics

, 165–166

Trail commissions

, 88

Transaction fees

, 135

Transparency

, 5, 59, 63, 91, 128, 161–162

Treasury

, 101

Treynor ratio

, 32–33

Trust

, 151

individual securities chosen for

, 138

investors buy, sell, or switch units of

, 137–138

Trustee

, 121

12b-1 fees

, 25–26, 88

Two Harbors Investment Corp. (TWO)

, 155

Undiversifiable risk (see Market risk; Market—risk)

Uninterrupted strategy

, 85

Unit investment trusts (UITs)

, 3, 117–120, 123–126, 131–132, 144

advantages forinvestors

, 126–128

costs and fees associated with owning

, 142–144

disadvantages/drawbacks

, 128–130

features

, 122–123

individual securities chosen for trust

, 138

investment in

, 136–137

investors evaluating performance of

, 134–136

options available when trust matures

, 140–141

organizers

, 120–121

participants and their role

, 120–121

registration requirements for

, 139

regulations

, 141–142

selection criteria

, 132–134

takeaways

, 144–145

taxes

, 139–140

trade on secondary market

, 140

United States (US)

securities UITs

, 132

UITs originated in

, 117–118

Unitholder

, 119–120

fees

, 142

“Unity creates strength”

, 2

Unsystematic risk

, 26–27

Upside risk

, 27

Value

funds

, 22

investing strategy

, 132

value-based funds

, 99

Vanguard 500 Index (VFINX)

, 47–48

Vanguard Real Estate Index Investor (VGSIX)

, 161

Vanguard STAR Fund

, 11

Vanguard Target Retirement Funds

, 11–12

Variable annuity

, 6–7

Variety in mutual funds

, 9–10

Venture capital

, 114

Volume discount

, 136

Voting

, 6

Window dressing (strategy)

, 11

Yield

, 32, 169

on bonds or stocks

, 134–135

dividend

, 169

income investors high

, 105

property

, 170