This module provides a comprehensive look at mutual funds and other pooled investments, including unit investment trusts, exchange-traded funds (ETFs) including leveraged and inverse ETFs, exchange-traded notes (ETNs), guaranteed investment contracts (GICs), stable value funds, and business development companies (BDCs). Selecting a mutual fund, including potential pitfalls, is also covered.

5–1 Explain the characteristics, structure, types, and objectives of unit investment trusts and closed- and open-end mutual funds.
5–2 Explain the characteristics and objectives of exchange-traded funds.
5–3 Explain key concepts that apply to leveraged and inverse mutual funds and ETFs.
5–4 Understand the unique risks, regulatory concerns, and suitability requirements of leveraged and inverse ETFs.
5–5 Explain the characteristics and objectives of ETNs, GICs, and BDCs.
5–6 Analyze mutual fund data to determine critical factors in selecting funds for investment. 5–7 Evaluate mutual fund alternatives to select an appropriate fund to meet given client objectives and risk profiles.

Author: Jim Pasztor, MS, CFP®

Jim Pasztor, vice president of Academic Affairs at the College for Financial Planning is also involved with several of the College’s investment courses and the white paper series. He is a CFPM® practitioner, and has an MS degree in personal financial planning and an MSF degree in financial analysis, both from the College for Financial Planning. Jim was the recipient of the Edward D. Baker III Journal Award from IMCA in 2014 for his article Endogenous Risk and Dangers to Market Stability. You can reach Jim at jim.pasztor@cffp.edu.

Complexity Level: Advanced