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Unformatted text preview: 1 Investment Companies Economics 71a: Spring 2007 Mayo 17, Malkiel 8 Lecture 4.8 Goals History Closed and open funds Performance and fees Types of funds Index funds ETF ’ s Hedge funds How well do funds perform? History First funds, March 1924 State Street Research Massachusetts Investment Trust Massachusetts Financial Services now owned by Sun Life of Canada Boston is key location Growth Recently phenomenal Increase in total capital between 25-50 times since 1980 Number of funds has also exploded 1980 = 468 funds in U.S 1997 = 5,765 Today around 10,000 Closed versus Open Funds Closed end fund Traded like regular stock (price) Fixed number of shares Basically a corporation whose only assets are its portfolio Open end fund New shares issued for each buyer Valued at current market value of the fund portfolio Net asset value (NAV) 2 Net Asset Value (NAV) Total net worth of fund Assets - Liabilities Assets: Stocks, bonds Liabilities: Borrowing NAV/share More on Closed versus Open Most funds are Open-End Closed-end funds occasional trade differently from their asset values (NAV)...
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