Financial Definitions: Funds = FUN.

Considering that I’m headed to business school in the next few years, I feel I should be doing the baseline self-education to figure out the finance and investment-related lingo that I’m frankly less interested in studying, but want to be able to navigate as a student and investor someday. This is a post I admit to being self-conscious about since half my graduated classmates have jobs at hedge funds and i-banks and have far more sophisticated knowledge than I, lowly bookish English major. These definitions below start broad and go specific.

exchange-traded-funds: investment vehicles traded like stocks, a fund is roughly the net value of all the assets included in the fund; most funds track to a certain index, like the S&P500
actively-managed exchange-traded-funds: in this type of fund, an investor can actively manage the assets within it, they can focus on market inefficiencies, and try to find the value assets versus passively tracking to an index in which the fund would likely be holding a mix of growth and value stocks
mutual funds / open-end funds: a collective investment of assets, equity funds are the most common type; in the US they are open end funds, which means they can issue and redeem shares at any time; most of these funds are actively managed
closed-end funds: collective investment with only a limited number of shares
hedge funds: a private, largely unregulated pool of capital; charges both a performance fee and a management fee; I’m not going to pretend to understand why yet, but because of exemptions that don’t apply to mutual or other funds, hedge funds can typically invest in more complicated, risky investments than a public fund can (like short selling, futures, swaps and other forms of leverage)