Chapter 7: Investmemt Funfs Flashcards
How can the pooling of funds via a CIS benefit a retail investor ?
Economies of scale, diversification, access to professional management, access to wider range of investments, regulatory oversight and tax deferral.
What is an investment management approach that seeks to produce returns in line with an index known as ?
Passive Investing
Why would a European investment fund seek undertakings for collective investment in transferable securities status ( UCITS )
UCITS is designed to facilitate the promotion of funds to retail investors in the EU and EEA. Allows them to trade in other markets. Cross boarder sales throughout the EU
How does the trading and settlement of an authorised unit trust differ from that of an ETF?
An ETF is traded on a live exchange whilst AUTs are not. ETFs settlement is T + 2 whilst AUTs is T + 4
How does OEICS differ from conventional companies ?
An OEIC is a collective investment scheme and has a diversified pool of investments. It can also create more units as it is open ended.
For which type of collective investment vehicle would the fund manager most likely quote bid and offer prices ?
ETFs have a bid and offer price.
What are the some of the principle ways in which investment trusts differ from AUTs and OEICS?
It is closed ended, produces a fixed number of shares at the outset and mainly invests into other companies.
What is an open ended type of investment vehicle that is traded on a stock exchange ?
ETFs
What is the main way that private equity firms raise capital ?
They provide finance for companies in return for equity in the company.
