12. Funds Management

Question 1

Private Management Firm

Answer 1

Each investor has their own separate account with the firm, customised, client relationship

Question 2

Investment (Fund) Company

Answer 2

One portfolio providing a wide-range of investment solutions for all investors
-Issue shares representing the proportional ownership of the fund

Question 3

NAV (concept)

Answer 3

Net Asset Value: for an investment company is similar to the share price of a corporation’s common stock

• Closed-end: stock trades on secondary market
• Open-end: mutual funds, managers sell and redeem (buy back) shares at the NAV

Question 4

Load vs. No-Load Open-End Funds

Answer 4

• The offering price for a share of a load fund equals the NAV of the share plus a sale charge
• A no-load fund imposes no initial charges so it sell shares at the NAV