CO SCI 136 Lecture Notes - Lecture 16: Capital Asset Pricing Model, Investment Company, Systematic Risk
Document Summary
Week 4 mutual funds: chapter 4: mutual funds and other investment companies. Functions of investment companies: record keeping and administration, Diversification and divisibility, professional management and lower transaction costs. Nav= (market value assets liabilities) / shares outstanding. Commingled funds: partnerships of investors that pool funds. Reit: similar to closed-end fund but investing in real estate. Hedge funds: vehicles that allow private investors to pool assets. Etfs trade continuously mutual funds only once a day. Etfs can be sold short mutual funds can"t. Passive investment strategies have outperformed mutual funds: chapter 18: evaluating investment performance. Arithmetic average return: sum of the (20) annual returns divided by 20. Geometric average return: constant annual return that would provide the same cumulative return over entire investment period (20 years) Comparison universe: set of portfolio managers with similar investment styles otherwise you cannot compare the two. High beta portfolio: called cyclical or aggressive.
