What are the essential differences between ETF's, closed end funds, and unit investment trusts?

Question

XLF is an exchange traded fund.
QQQQ is a unit investment trust.
BEP is a closed end fund.

Answer 1

QQQQ is not exactly a unit trust. It is more of an exchange traded index fund. Both exchange traded index funds and unit trusts are essentually unmanaged. The difference between the two is that a unit trust does not attempt to match its return to any benchmark. It is basically a pool of assets, normally bonds, that are purchased and then sold to the public. They sit there until they are called. With an exchange traded index fund it is minimally managed. That is, it attempts to continually match the performance of the index that it is mimicing. If the index changes it too has to change. This happens more frequently than one might imagine because of mergers and bankrupcies and additions and deletions from the index. For example the Dow Jones Industrial Average is continually being adjusted by deletions and additions.

A closed end fund is also an exchange traded fund. It is different from an index fund in two important respects. First, it is managed. Second, there is a fixed number of shares that were issued. No additional shares are generally distributed, but the fund might buy back shares thus reducing the number outstanding. The important point is that there is a fixed amount of capital that has to be managed. It does not grow by issuing more shares. It can only grow by increases in net assets and only then by not realizing the gains.

Answer 2

this kind of large style of economic agencies, Subsidiaries of numerous Banks are operating Mutual money. those promoters have created quite some schemes less than mutual fund ETF ( replace Traded Fund ) is between the schemes. on the time of providing those schemes to public some schemes are made open ended, ability, that investor can at any time change into member and make investments in those schemes. while in the closed end money, after a particular date it isn't accessible to make investments in those schemes.

Answer 3

Note on close ends. They CAN grow as they allow you to reinvest the dividends/capital gains & some even sell new shares from time to time. I have been in ADX PEO & others for 20 yrs. The differences should not matter to you at all - just dig in.