What are stock market funds?
Exchange funds are stock funds that allow individual investors to exchange their ownership of individual shares for units in the exchange fund for mutually agreed exchange rates. The swap nature of the transaction means that stock market funds are also known as swap funds. They enable individual investors to increase their diversification of investment in a tax -efficient way, as capital tax raising from an individual investor is effectively postponed.
reflecting their primary purpose are commonly introduced to investors as a solution to concentrated wealth. Sometimes they are mistakenly confused with the stock market funds; But both products are completely different investment vehicles. One of the main differences is that stock market funds are not listed on the official stock exchange and therefore cannot be publicly traded. This allows the investor to postpone the payment of any capital revenue tax until the investor sells units in the exchange fund. At this point, the tax will be payable by the investor of the difference betweenThe sale price of the units and the original cost of stocks that were exchanged in the stock fund.
Exchange Fonds are unique to the United States. They existed for almost 50 years, but at the end of the 90s. They increased significantly in number and value. This was the end of the technological boom, where many individuals collected significant reserves in a single or limited number of technological companies.
Exchange funds may be private or public. Private Stock Exchange Funds own private, non -ruined companies, while public stock exchange owns publicly traded shares. There are a number of large operators who provide one or the other type of fund. In addition, there are many small exchange funds created by several individuals, each of which has the same problem in the form of wealth focused in one or several main supplies. Together they form a limited partnership and confuse some of their shares to the Fund in returnu for a unit in the fund.
Exchange funds can also allow individuals to lighten their holding of individual shares without violating the locking restrictions. This is because shares held in the exchange fund are unlikely to sell seven years ago. In order to minimize the capital revenue tax liability, the stock fund must retain its shares for at least seven years.