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Investing your money should be something you start doing as soon as possible if you want to help ensure you are financially confident in the future when you are no longer able to work to earn income. When it comes to investing there are different strategies you can choose from to start building wealth and growing your money. Which strategy you choose should be customized to fit your specific individual needs. 

One financial instrument you may want to consider for investment purposes is a defined portfolio. 

What is a defined portfolio? 

A type of investment trust, a defined portfolio holds a predetermined selection of stocks and bonds. Exactly which securities will be chosen by the fund company managing the defined portfolio investment trust. Defined portfolios are not actively managed and are closed-ended. This type of fund raises a fixed amount of funds via an initial public offering (IPO). The defined portfolio is then traded like a stock on various stock exchanges. 

How does a defined portfolio work? 

Units of ownership in a defined portfolio can only be sold after the initial buying phase has been completed. The securities held in a defined portfolio are fixed and usually will be assigned a fixed shelf life. At this point, the securities will be sold and the proceeds from the sale are returned to investors. The price of units of ownership in a defined portfolio will fluctuate throughout the trading day. 

How the broader market interprets supply and demand will determine the price a defined portfolio is traded at. The volatility in future expectations of value can commonly lead to discrepancies between the net asset value of the defined portfolio fund and the current trading price. 

Considering risk 

When deciding whether or not to add a defined portfolio to your investment strategy you will need to take potential risk of loss into consideration. Some defined portfolios will have more inherent risk than others. The level of risk will depend on the types of assets the defined portfolio will be holding. 

Defined portfolios holding more growth stocks, such as technology and drug companies, may have more risk but will have a higher chance of larger gains for investors. On the other hand, those funds which have more conservative value stocks and less volatile bonds will be less risky but have less potential for large gains. 

Determine your own risk tolerance 

It is important to understand your own tolerance for risk when deciding which defined portfolio to invest in or making any other type of investment decisions. Thoroughly analyzing your current personal financial health will give you a better understanding of how much risk you want to take on. Also, what stage of life you are in will determine the appropriate level of risk, with younger people being able to take on more risk than those who are retired. 

Our team of competent and knowledgeable financial advisors at Independent Financial Services will work with you to craft a personalized investment plan. 


Investors should carefully consider the investment objectives, risks, charges and expenses of Closed-end Funds before investing. The prospectus and summary prospectus contains this and other information about Closed-end Funds. The prospectus and summary prospectus is available from your financial advisor and should be read carefully before investing. 

This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Investments mentioned may not be suitable for all investors. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Any opinions are those of the author and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct.