IB Classroom: The Common Financial products You Need Know For a Career in Wealth Management and Asset Management
💰 Mutual Funds
Structured to diversify the client’s money by investing it across different bonds and stocks. Asset Management firms in turn charge a fee for managing these mutual fund portfolios. You can choose to invest in Emerging Market Funds, Growth Funds, Municipal Funds (investing in debt issued by states/ governments), TIPS (US Treasury bonds), Index, and Investment grade funds.
Their value is derived from other underlying assets. Can be traded over-the-counter or on an exchange like Asian options, Credit Default Swap, FX option, equity-linked notes.
💰 ETF (Exchange Traded Fund)
An ETF is diversified in individual securities, commodities, preferred stock, or indexes like S&P 500. But it trades actively throughout a trading day (unlike mutual funds that are traded by the closing bell). Traders monitor price fluctuations across indexes to pick price points for buy and sell decisions for immediate liquidity.
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