12- Investment Products Flashcards
What are 3 main advantages of Exchange Traded Products (ETPs)?
-Traded on secondary markets
-Not subject to stamp duty
-Can be shorted
Give 4 main types of Exchange Traded Products (ETPs)
-Physical ETPs: Own underlying assets
-Synthetic ETPs: Gain exposure through derivatives
-Inverse ETPs: Gain a short exposure to the underlying assets
-Leveraged ETPs: Will borrow to earn a multiplied return
What are structured products?
Two or more investments combined, generally a security and a derivative
What are 3 main types of structured products?
-Structured deposit
-Structured capital protected product
-Structured capital at risk product
How does a Structured deposit work?
Offering an attractive interest rate if a referenced entity meets a target e.g. 6% p.a. if FTSE stays above 6500
How does a Structured capital protected product work?
They are designed to return the original capital at maturity as a minimum
What is carried interest in Private Equity?
The investment returns generated often in excess of a previously agreed rate of return (hurdle rate)
What is Co-investment in Private Equity?
Where investors buy a stake in a PE fund, but also buy shares directly in the invested companies
What are the 3 main characteristics of Investment trusts?
-Closed ended
-May borrow money for gearing purposes
-Not actually a trust
What are the 3 main characteristics of Unit trusts?
-Open ended
-When investors sell units it affects value of fund
-Are actually trusts
