Investment Products
Product families
Investment products fall into cash/money market, fixed income, equities, managed products and derivatives. Fixed-income securities include government and corporate bonds, money market instruments, and preferred shares, which are legally equity but often analyzed for yield and credit. Equities offer residual ownership and voting rights; common shares rank behind debt and preferred shares in liquidation. Managed products include mutual funds (open-end), ETFs (exchange-traded, often passively or actively managed), segregated funds with insurance guarantees, and hedge funds with alternative strategies. Derivatives-options, futures, forwards and swaps-derive value from an underlying asset and can hedge or speculate.
Features to compare
Compare liquidity, credit risk, interest-rate risk, currency risk, fees, tax treatment and redemption mechanics. Mutual funds trade at end-of-day NAV; ETFs trade intraday at market prices that can differ from NAV. Front-end, back-end and low-load sales charges affect net returns. MER includes management and fund expenses. Segregated funds offer maturity/death guarantees, typically with higher costs and reset features.
Traps
Options buyers have rights; writers have obligations. A call gives the right to buy, a put the right to sell. Bond prices fall when yields rise, and longer duration means greater sensitivity. Preferred shares are not bonds: dividends can be suspended and rank below debt. Do not confuse ETF market price with NAV or mutual fund NAV with intraday trading.
Worked rule
Approximate bond price change ≈ –duration × yield change. If duration is 4 and yield rises 1 percentage point, price falls about 4%. For options, the buyer’s maximum loss is the premium paid; the writer’s risk can be much larger.