FINRA Investor Alert: Closed-End Fund Distributions
(Nov 2013)
The Financial Industry Regulatory Authority (FINRA) recently released an Investor Alert to draw investors attention to the subtle difference between distributions and returns in the context ofclosed-end funds. Closed-end funds are pooled investments like mutual funds (which are also known as 'open-end funds'), but have only a fixed number of shares. This distinction has a big impact on how the fund is analyzed.
Distributions from closed-end funds are typically quoted as a rate (e.g. 6%). This...
FINRA Issues Warning on ETNs
(Jul 2012)
The Financial Industry Regulatory Authority (FINRA) recently issued an Investor Alert regarding the risks of exchange-traded notes (ETNs).
ETNs are a type of unsecured debt instrument typically issued by banks and other financial institutions. Similar to its close cousin the exchange-traded fund (ETF), ETNs track the returns of a specified asset class--often an index. However, unlike ETFs, ETNs do not hold actual assets tracked by the underlying index. This means investors in ETNs can suffer...
FDIC Warns Investors about Structured CDs
(Jul 2012)
Earlier this year, the Federal Deposit Insurance Corporation issued a warning about structured certificates of deposit (CDs), which are hybrid investments combining features of both traditional CDs and structured products. FINRA has also recently investigated the market for structured CDs, which has been estimated to be as large as $30 billion.
Structured CDs are essentially bank deposits whose interest payments depend on the value of a reference index instead of a predefined fixed or...
FINRA Investor Alert: Asking the Right Questions
(Jul 2011)
The Grass Isn't Always Greener-Chasing Return in a Challenging Investment Environment
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert to help retail investors, who are seeking for higher returns through investing in complex securities such as structured products, ask the right questions before making such investment decisions.
Investors are encouraged to read through the FINRA article. The article includes a section on 'Structured Retail Products', since...
FINRA Investor Alert: Equity-Indexed Annuities
(Sep 2010)
Equity-Indexed Annuities - A Complex Choice
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert on the rewards and risks of equity-indexed annuities. An annuity makes periodic payments to the holder of the annuity. There are fixed annuities that make fixed payments and variable annuities that make variable payments. Equity-indexed annuities (EIA) are similar to both fixed and variable annuities. They pay an interest rate linked to an equity index and guarantee...
FINRA Investor Alert: Variable Annuities [Update]
(Sep 2009)
Variable Annuities: Beyond the Hard Sell
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert to help investors decide on how to invest for retirement. An annuity makes periodic payments to the holder of the annuity. There are fixed annuities that make fixed payments and variable annuities that make variable payments.
Annuities can carry costs and risks that many investors may not be aware of because brokers who are incentivized by commission-generation do...
FINRA Investor Alert: Municipal Bonds
(Jun 2009)
Municipal Bonds-Staying on the Safe Side of the Street in Rough Times
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert on municipal bonds. This provides a thorough background on municipal bonds and advice on investing.
There are certain risks in investing in municipal bonds. For example, the municipality issuing the municipal bonds can default, leading to the loss of some (if not all) interest and principal to the investor. This is called default risk....
FINRA Investor Alert: Cat Bonds
(Apr 2008)
Catastrophe Bonds and other Event-Linked Securities
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert on catastrophe bonds, or 'cat bonds'. Cat bonds pay higher interest rates compared to the equivalent corporate bonds.
However, there are risks involved in holding cat bonds. Investors of a cat bond can lose interest and principal if the catastrophe, to which the bond is linked, occurs. Cat bonds are quite illiquid, the pricing information are generally not...
FINRA Investor Alert: Variable Annuities
(Mar 2006)
Should You Exchange Your Variable Annuity?
The Financial Industry Regulatory Authority (FINRA) published an Investor Alert on how to determine if investors should exchange their variable annuity for another model. An annuity makes periodic payments to the holder of the annuity. There are fixed annuities that make fixed payments and variable annuities that make variable payments.
While equity-indexed annuities have become increasingly popular, some have questioned their value and...
