Commingled Fund
It’s a bunch of assets which used to be single, having come to the finance party stag...now being put together in one large Tinder group. For that finance party, the host had to make the requisite ice sculpture. If that sculpture was done to entertain only one set of assets, its relative cost was probably high. But if it covered a hundred different accounts all invited to the party to ogle the Great Bald Wonder...then its cost per visitor is some one hundredth of what it would have been otherwise.
Commingled funds exist typically when a family is successful and...disparate.
Joe made his money from a shoe factory he sold. Bob made his money from his special head shine serum. And Susy made her money from her plastic surgery clinic. By commingling their assets, they sort of become a kind of hybrid mutual fund...only they don't have to suffer all the regulatory filings of being a mutual fund. They hire a professional manager to run the commingled assets. Think: retired money manager, or someone in the broker-dealer world.
They can draw margin against their funds. They can sell stocks short, i.e. bet they’ll go down. They can buy and sell options in their funds...and a bunch of other freedoms that just buying a vanilla mutual fund wouldn’t have given them.
Wow. With all that, what can't commingled fund do? Well, it sure won't protect you from frostbite if that ice sculpture leaves you a little too...thirsty.
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Finance: What is a Fund of Funds?5 Views
Finance a la shmoop what is a fund of funds? all right well first there's a
fund it has say a hundred stocks in it you know index fund, mutual fund,
exchange-traded fund or ETF but then there's a fund of funds not just a fund
of stocks but a fund of funds like if there was a fund of funds that comprise [Computer screens with graphs appear]
ten funds and each fund had a hundred stocks in it while then that fund of
funds would be representing the performance of a thousand stocks lots
and lots of stocks and stocks because Amazon ships a lot of box and box it's [Man wearing Dr Seuss hat discussing amazon boxes]
from dr. Seuss we got that for no charge notionally a fund of funds appeals to
investors because well they can grow very large the fund of funds can not the
investor when they're eating a lot because they're nervous in stock market
I do that and then directly negotiate with money managers to give what is
essentially a wholesale volume discount to shareholders of fund to funds thingies
well if fund of funds comes to a hedge fund that normally charges a 2% management
fee and takes 20% of profits well if that fund is investing a big chunk of [Lots of cash appears on a table]
that fund say 50 million bucks well maybe they can negotiate for one and a
half percent management fee in just 15% carry or something like that well it's
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knock on the doors of the wealthy asking for one percent a year for themselves [Fund of fund manager knocks on door and man opens door]
for their own management fees on top of what the hedge mutual and while other
funds want to charge theoretically there could also be a fund to fund to fund of funds
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the fees if they they add up fund of funds can be fun....
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