MITTS are a kind of hybrid investment, bringing together some aspects of both debt securities and equities. Like debt securities (things like bonds and notes), they pay off no matter what the market does (as long as you hold them to maturity). But, like equities, MITTS still show a return when the stock market is doing well.
The MITTS were first devised by Wall Street investment firm Merrill Lynch, who wanted to create a way for investors to limit downside risk during stretches where the overall market was down.
The MITTS trade like stocks, and their payouts are tied to particular stock indexes. If the index tied to your particular MITT goes up, you get a return based on the amount it rose. If it goes down, you don't get a return, but you do get your principal back. No gains, but no losses either.
However, the investor doesn't receive their return until the MITTS reach maturity. Also, the gains are only proportional to the underlying index...not the full amount. If the S&P 500 rises 10%, the MITTS tied to it don't necessarily pay off the full 10% gain. The investor only gets a portion of that return.
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Finance: What is a Country Basket (Index...30 Views
Finance, a la shmoop. What is a country basket index fund?
All right we're picking daisies, marigolds, lilies so uh how do we [Pictures of flowers]
rephrase in Italian? Like, we want to fill a portfolio basket with just stocks [Pouring a glass of red wine]
representing the overall financial health of Italy. Is Italy healthy? While
they smoke a lot they drink a lot of wine they eat a bunch of pasta but there
always seems to be a woman from some small village who's celebrating her [Old woman at a birthday party]
117th birthday over there. Well a country basket is just an index fund of
stocks representing a country. Like we're doing Korea... South we're gonna have
in that basket dunno some Samsung, a load of Daewoo, a hunk of Hyundai and some [Company stocks being added to the basket]
nice barbecue on the side. That'd be our Korean country basket and it's a good
basket to fill if you're just bullish on a country but not really sure which
flower on which to place your bets. It's like instead of trying to decide between [The stocks in the basket turn into flowers]
roulette or poker or slots... Well you just buy stock in Las Vegas
Sands you know you bet on the entire casino, and bueno Fortuna you know good [Someone checking their cards in a casino]
luck there pal, doesn't the house always win? Yeah so why do people keep going there?...
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