What Is a Capped Fund? A capped fund is a pooled investment fund that has imposed specified maximum limitations included on its investing or expense structure. Capped funds will often have a set cap on fees or holdings associated with the fund’s management. Fund companies can have broad latitude for adjusting expense levels and holdings
What Is a Capped Index? A capped index is an equity index that has an upper limit on the weight of any single security. Thus, a capped index sets a maximum percentage on the relative weighting of a component that is determined by its market capitalization, even if that company naturally carries a greater weight in
What Is a Capped Option? A capped option limits, or caps, the maximum possible profit for its holder. When the underlying asset closes at or beyond a specified price, the option automatically exercises. For capped call options, the option exercises if and when the underlying closes at or above the predetermined level. Similarly, capped put options
What Is a Capped Rate? A capped rate is an interest rate that is allowed to fluctuate, but which cannot surpass a stated interest cap. A capped rate loan issues a starting interest rate that is usually a specified spread above a benchmark rate, such as the federal funds rate. Key Takeaways A capped rate
What Is a Captive Agent? A captive agent is an insurance agent who only works for one insurance company. A captive agent is paid by that one company, usually with a combination of salary and commission, plus benefits. They may be a full-time employee or an independent contractor. Key Takeaways A captive agent is an
What Is a Captive Finance Company? A captive finance company is a wholly-owned subsidiary that finances retail purchases from the parent firm. They range from mid-sized entities to giant firms depending on the size of the parent company. The basic services of a captive finance company include basic card services like a store credit card and full-scale
What Is a Captive Fund? A captive fund is a private pooled investment fund that is managed for a select group of investors or in affiliation with a single entity. It is often created for the benefit of an organization’s members or a firm’s employees. These funds are “captive” since they are limited in who
What Is a Captive Insurance Company? A captive insurance company is a wholly owned subsidiary insurer formed to provide risk mitigation services for its parent company or related entities. Companies form “captives” for various reasons, such as when: The parent company cannot find a suitable outside firm to insure it against particular business risks The premiums
What Is a Captive Real Estate Investment Trust? A captive real estate investment trust is simply a real estate investment trust (REIT) with controlling ownership by a single company. A company that owns real estate associated with its business may find it advantageous to bundle the properties into a REIT for the special tax breaks. This tax
What Is Captive Value Added (CVA)? Captive value added (CVA) refers to the financial benefits an organization could realize by creating a captive insurance company owned and operated by the parent organization. Key Takeaways Captive value added (CVA) is the financial benefit a company could achieve by creating their own captive insurance company.A captive insurance
