6 Flashcards
Collective investment schemes
Unit trust & OEOIC
FSCS protection for OEIC & unit trust
£85k
How are unit trusts protected?
By trustees and trust deed
How are OEIC protected?
By independent depository and company law
Which of OEIC and unit trusts are open ended?
Both
Net asset value
Total assets of shares equal total assets held
Which of OEIC and trust funds must follow net asset value?
Both
Can OEIC and init trust shares be traded on the stock market or death?
Death only
Investment association of an OEIC and unit trust
Separates them into sections
Types of index tracking funds:
- Full relocation
- Stratified sampling
- Optimisation/synthetic
F - Fund owns shares in proportion to index
S - sample of funds held but not replicating index
O - buys and seeks stock within index using a computerised model
Efficient market hypothesis
All information is reflected in the market and their prices so the people who would support this would use index trackers only
Negative screening
Positive screening
Neutral approach
Neg. - avoid unethical practices
Pos. - actively seek out ethical invest.
Neut. - choosing socially responsible firms
What must a firm by to market in the UK?
Authorised by the FCA
Types of authorised funds:
Undertaking for financial investments (UCITS) scheme - once authorised can be marketed in the EU
Non-UCITS retail scheme - cannot be marketed in the EU
Qualified investors scheme - cannot be marketed other than to professional investors
What main thing must a firm be to be classed as a UCITS?
Diversified
5 rules of diversification for UCITS
No more than 10% in 1 share
Max. of 4 companies can have max holding of 10%
Any other shares must not exceed 5%
Min. of 16 holdings given the above
Atleast 90% of investments must be in approved securities
Exceptions to diversification rules for UCITS
If replicating index tracker funds then max. holding for one company is 20% (35% in extreme cases)
Lower limit of 6 securities if holding government bonds
What sets, what a scheme can or can’t invest in within an OEIC or trust fund?
Trust deed or scheme booklet
What % can UCIT, QIS’s and Non-UCITS gear upto and which one can be permanent?
10% and Non-UCITS can be permanent
Upto 100% of net asset value for QIS’s
Unregulated Collective Investment Scheme (UCIS)
Unregulated investment so cannot marketer itself in the UK to retail clients
AIF 3 main aims?
Enhance supervisory practices to prevent market instability
Improve investor protection
Promote efficiency and competition
4 Rules of a unit trust
Trustee legally owns assets
Manager is responsible for day to day running
Can only be constituted if signed a trust deed
Regulated by FCA and manager is authorised by the FCA
How to remove a unit trust manager?
If receive a majority vote from unit holders
What is the purpose of the register in a unit trust?
Hold information on unit holders name, holding amount and type, date unit was registered