Investment Companies and ETFs: Rapid Fire

What this video covers

• The three investment company types defined by the Investment Company Act of 1940: face-amount certificate companies, unit investment trusts (UITs), and management companies
• Why UITs issue units (not shares), carry a set termination date, and have no board of directors, no investment adviser, and no active management
• How open-end funds forward-price at net asset value (NAV) while closed-end funds trade at market price, allowing premiums and discounts
• Why sales charges are always computed as a percentage of POP (never NAV), and how to back-solve POP from NAV
• The 8.5% maximum aggregate sales charge, the breakpoint and letter of intent (LOI) rules, and the 13-month LOI window with 90-day backdating
• Why mutual fund exchanges within the same family are taxable events, why long-term capital gains distributions get long-term rates regardless of holding period, and how ETFs avoid capital gains through in-kind creation and redemption
• The 90% distribution requirement for regulated investment company (RIC) pass-through status, and why banks must disclose funds are not FDIC-insured