Additional Products
- Exchange Traded Funds (ETF's)
- An Exchange Traded Fund (ETF) is a security that tracks an index, a commodity or a basket of assets like an index fund, but trades like a stock on an exchange with daily price fluctuations as it is bought and sold. When buying or selling ETF's, you pay the regular commission to your broker that you'd pay on any regular order. By owning an ETF, you receive the diversification of an index fund as well as the ability to sell short, buy on margin and purchase as little as one share. Another advantage is that the expense ratios for most ETF's are lower than those of the average mutual fund and an ETF does not have its net asset value (NAV) calculated every day like a mutual fund does.
Exchange-traded funds (ETFs) that offer leverage or that are designed to perform inversely to the index or benchmark they track—or both—are highly complex financial instruments that are typically designed to achieve their stated objectives on a daily basis. Due to the effects of compounding, their performance over longer periods of time can differ significantly from their stated daily objective. Therefore, inverse and leveraged ETFs that are reset daily, typically are unsuitable for retail investors who plan to hold them for longer than one trading session, particularly in volatile markets.
- 1031 Tax Deferred Exchanges
- A section of the U.S. Internal Revenue Service Code that allows investors to defer capital gains taxes on any exchange of like-kind properties for business or investment purposes.
The idea behind 1031 Exchanges is that when an individual or a business sells a property to buy another, no economic gain has been achieved. Only a transfer from one property to another has occurred and the only thing that has changed is where the value resides. Taxes on capital gains are not charged upon sale of a property if the money is being used to purchase another property - the payment of tax is deferred until property is sold with no re-investment.
Investors should consider the investment objectives, risks, charges, and expenses of an Exchange-Traded Fund (ETF) carefully before investing. A prospectus contains this and other information about the ETF can be obtained from the issuer. The prospectus should be read carefully before investing.
As tax considerations drive 1031 exchanges, investors should obtain a legal opinion regarding whether a particular exchange structure would qualify as a like kind exchange of real property and perform sufficient due diligence into the tax risks of the exchanges.
- Tenants in Common (TICs)
- A joint tenant in common (TIC) legal structures or co-owned real estate (CORE), which allows individuals to own a fractional interest in a property, such as an office building, apartment complex or shopping center. A 1031 TIC interest in real estate allows investors to pool their resources and purchase larger, higher valued and better positioned properties of equal or greater value. TICs permit the investors to pool their assets with other investors in order to invest in larger real estate offerings. Thus, an investor could exchange his or her rights in a rental property for the interests in a pool of assets of a larger property offering owned by several other investors.
As tax considerations drive 1031 exchanges, investors should obtain a legal opinion regarding whether a particular exchange structure would qualify as a like kind exchange of real property and perform sufficient due diligence into the tax risks of the exchanges. Fees associated with TIC exchanges may outweigh the value of the tax benefits provided by the exchange
- Direct Private Placements (DPP's)
- Direct Private Placements are the raising of capital or private sale of securities directly to institutional investors, such as banks, mutual funds, insurance companies, pension funds, and foundations. This results in the sale of securities to a relatively small number of investors. These offerings are performed without an underwriter; and are usually exempt from SEC filing. In many cases detailed financial information is not disclosed and the need for a prospectus is waived. Finally since the placements are private rather than public, the average investor is only made aware of the placement usually after it has occurred.
- Limited Partnerships
- An ownership unit in a publicly traded limited partnership, or master limited partnership (MLP). This trust gives the unit holder a stake in the income generated by the partnership company and all available cash flow from operations is often distributed to unit holders after the deduction of maintenance capital. One benefit of this type of investment is that because the units are publicly traded, there is much more liquidity for investors compared to a traditional partnership.
- Warrants, Rights and Units
- Warrant: Warrants are derivative security certificates that give the holder the right to purchase a specific amount of securities (usually equity) from an issuer at a specific price, usually above the current market price at the time of issuance. Should the security rise to above that of the warrant's exercise price, the security can be bought at the exercise price and sold for a profit. Otherwise, the warrant will simply expire or remain unused. Warrants are guaranteed, issued for an extended period, anywhere from a few years to forever and are often included in a new debt issue along with a bond or preferred stock. Warrants are listed on options exchanges and trade independently of the security with which it was issued.
Right: A privilege allowing existing shareholders to buy shares of an issue of common stock shortly before it is offered to the public, at a specified or discounted price, and normally in proportion to the number of shares already owned.
Unit: A combination of multiple securities, such as common stock and warrants, sold together as a single product. - American Depository Receipts (ADR's)
- An ADR is a negotiable certificate issued by a U.S. bank and is an excellent way to buy a specific number of shares in a foreign stock traded on a U.S. stock exchange while realizing any dividends and capital gains in U.S. dollars. ADR's make it easier for Americans to invest in foreign companies, without undertaking cross-border transactions. ADR's are denominated in U.S. dollars, held by a U.S. financial institution overseas and can be traded like the shares of US-based companies. Each ADR can represent a fraction of a share, a single share, or multiple shares of foreign stock and are listed on the NYSE, AMEX or NASDAQ.
ADR's do not eliminate the currency and economic risks for the underlying shares in another country and incur conversion expenses and foreign taxes and in accordance with the deposit agreement.