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What Is A Master Limited Partnership? Master limited partnerships (MLPs) are exchange-traded vehicles that invest primarily in energy and other natural resource projects, particularly oil and gas storage, transportation, exploration, development and pipelines. MLPs are popular with some investors for their very high yields, but they tend to track the price of oil, which means they can be volatile. Also, their share prices have been depressed in recent years, reducing…

What Are Government Bonds? Bonds are debt instruments issued by governments to the public. Essentially, when a government sells bonds, it's borrowing money to finance its activities, including infrastructure projects, health and welfare benefits, defense expenditures and the like. It also sells bonds to pay off its previously issued debt—in other words, selling new debt to retire old debt. The United States government bond market is the largest debt market…

What Is A Bear Hug? A "bear hug" is a buyout offer by one company for another that is so attractive that the target company has little choice but to accept it. Bear hug bids are usually well above the target company's prevailing market value and may include cash as an additional sweetener. While bear hugs are almost always unsolicited, they are not considered to be hostile because the offer…

What Is Venture Capital? Venture capital (VC) is a form of private equity (PE) financing in which investors buy stakes mostly in young companies in need of financing. Unlike PE funds, which typically invest in more established companies, VC firms invest mainly in startups, particularly in technology, biotechnology, financial services, payments and other businesses that show promise for growth. VC firms operate the same way as PE firms in that…

What Is A Mid-Cap Stock? Mid-cap stocks are generally considered to be those companies with a market capitalisation—the stock price multiplied by the outstanding number of shares—between US$2 billion and US$10 billion. They fall between large cap stocks, which have market caps above US$10 billion, and small caps, which are valued at between US$300 million and US$2 billion. Generally speaking, mid-cap stocks are slightly more risky than large caps, which…

What Is A Robo-Advisor? A robo-advisor is an automated, online platform that creates investment portfolios and financial plans for individuals. Roboadvisors compete with traditional human financial advisors but provide their services at a far lower cost with much lower minimum investment requirements and greater convenience. Robo-advisors have been around since 2008, but they have attracted a growing number of clients and share of assets under management. Indeed, several large traditional…

What Is A Hedge Fund? A hedge fund is a private pool of money managed by professional managers whose main goal is to maximize returns for investors as quickly as possible in both up and down markets. Hedge funds are similar to mutual funds but have some very different characteristics. For example, hedge funds are generally open only to large institutions or to "accredited" investors who must meet certain high…

What Are Small-Cap Stocks? Small-capitalisation, or small-cap, stocks are generally considered to be those with a market value of between US$300 million and US$2 billion. Market capitalisation is the price of the company's stock multiplied by the number of shares outstanding. Small-caps should not be confused with start-ups. Small-caps have generally "graduated" from the start-up phase and have established themselves enough to sell their shares to the public. Many are…

What Are Private Equity Funds? Private equity (PE) funds are alternative investment vehicles that use a pool of money from investors to make direct investments in companies, usually with the goal of making improvements to sell them later at a much higher price. Although PE funds have some similarities with hedge funds, they are quite different in the way they use their money, their risk levels, and their investment time…

What Is ESG Investing? ESG (environmental, social and governance) investing is a process that takes nonfinancial factors into an investment decision, rather than simply an asset's estimated financial return. ESG is also sometimes known as socially responsible, sustainable and mission-related investing, although they are not identical. Rather than simply avoiding or boycotting companies for moral or ethical reasons, such as shunning companies that make or sell tobacco, alcohol, firearms or…

What Are Capital Expenditures? Capital expenditures (CapEx) are long-term investments that a company makes to expand or improve its business. Investors and analysts generally view an increase in CapEx as a positive sign because it indicates that a company's business is growing. Similarly, rising CapEx for the entire economy is a positive macroeconomic indicator and generally a bullish signal for stocks. Capital expenditures include such things as the addition or…