Chapter 7 Tough Ones Flashcards
What is a unit trust?
A CIS in the form of a trust, where the trustee is the legal owner of the underlying assets and the unitholders are beneficial owners.
What is the benefit of pooling funds in a CIS?
Diversification
Access to professional investment management
Exposure to a wider range of investment vehicles
Lower commissions
What does OEIC stand for?
Open ended investment company
What is an Open Ended Investment company?
It is a CIS structured as a company - with investors holding shares.
How do OEIC’s structure differ from conventional companies?
They can create new shares and redeem old ones, according to investor demand. This is where the name “open ended” comes from.
Who is appointed when an OEIC is set up? (2 people)
An authorised corporate director and a depository
What is the role of an authorised corporate director?
Dealing with the day-to-day management of the fund
What is the role of the depository?
The holder of the investments, they are responsible for looking after them and overseeing the activities of the ACD.
What does UCITS stand for?
Undertaking for Collective Investments in Transferable Securities.
What does UCITS refer to?
A series of EU regulations that help fund managers create funds that can be accessed by retail investors across the EU.
What does NURS stand for?
‘non-UCITS retail schemes”
What does NURS refer to?
Funds that are deemed suitable by UK regulators but do not fall under all the EU regulations of UCITS.
