Difference Between Fund and Security
Key Difference: Where fund is an investment vehicle that allows a large number of people to pool their money together in order to invest in a range of different securities such as stocks, bonds, property or commodities. Security is a financing or investment instrument bought and sold in financial markets, such as bonds, debentures, notes, options, shares (stocks) and warrants.
In simple words funds are of two types. One where individual and institutional investors place money in different types of funds with the goal of earning money. Eg.mutual funds where money is pooled from many individuals and then the fund manager uses it to invest in a broad range of assets such as cash, bonds, equities, property etc.
In the realm of investments, some sorts of funds include:
Mutual funds: assets managed by skilled managers allocate the funds received from individual investors into stocks, bonds and/or alternative mutual funds.
Money market funds: extremely liquid mutual funds purchased to earn interest for investors through short fixed costs securities like Treasury bills and cash equivalent.
Exchange-traded funds (ETFs): like mutual funds, however listed on the general public exchanges like stocks.
Hedge funds: investment vehicles for high-net-worth people designed to extend the investors’ pooled funds by incorporating speculative ways like trading, derivatives and leverage.
Government bond funds: investors trying to place their cash away in low-risk investments will do therefore through Treasury securities, like Treasury bonds, or agency-issued debt, like securities issued by Fannie Mae. Both alternatives are backed by the U.S. government.
Other types of funds are the ones which are either allocated or set aside money. Eg. Government relief funds or the funds an individual set aside for future use.
The word 'secure' entered the English language in the 16th century. It is derived from Latin securus, meaning freedom from anxiety: se (without) + cura (care, anxiety)
Security is a financing or investment instrument issued by a company or government agency that denotes an ownership interest and provides evidence of a debt, a right to share in the earnings of the issuer, or a right in the distribution of a property.
Securities include bonds, debentures, notes, options, shares, and warrants but not insurance policies, and may be traded in financial markets such as stock exchanges.
Ex. A good investment portfolio will contain a diversity of types of security so that any one investment does not make or break the portfolio owner.
Primarily there are three types of securities:
1.An equity security represents ownership interest held by shareholders in an entity (a company, partnership or trust), realized in the form of shares of capital stock, which includes shares of both common and preferred stock. Holders of equity securities area unit generally not entitled to regular payments (though equity securities usually do pay dividends), however they're ready to cash in on capital gains once
they sell the securities (assuming they've exaggerated in worth, naturally).
2.A debt security represents cash that's borrowed and should be repaid, with terms that stipulates the scale of the loan, rate of interest and maturity or renewal date.
3.Hybrid securities, because the name suggests, mix a number of the characteristics of each debt and equity securities.Examples of hybrid securities embrace equity warrants (options issued by the corporate itself that provide shareholders the correct to buy stock at intervals a precise timeframe and at a selected price), convertible bonds (bonds that may be reborn into shares of common shares within the issue company) and preferred stock (company stocks whose payments of interest, dividends or different returns of capital is prioritized over those of different stockholders).
Some other definitions of the word security also exist in different contexts.
1.Banking: An asset pledged to guaranty the repayment of a loan, satisfaction of an obligation, or in compliance of an agreement.
Security gives a lender or oblige a legal right of access to the pledged asset and to take their possession and title in case of default for a foreclosure sale.
2. Computing: The extent to which a computer system is protected from data corruption, destruction, interception, loss, or unauthorized access.
3. The prevention of and protection against assault, damage, fire, fraud, invasion of privacy, theft, unlawful entry, and other such occurrences caused by deliberate action.
Ex. The people were really worried about intruders so they had lots of types of security including a dog and an alarm system with a panic button.