Collectives Flashcards
1
Q
What functions does the ACD of an OEIC carry out?
A
- Compliance & regulatory reporting
- Responsible for pricing
- Appoints/oversees manager
- Buys/sells shares
- Maintains shareholder register
- Maintains liquidity
- Prepares accounts
2
Q
What functions does the depositary of an OEIC carry out?
A
- Acts as custodian
- Safeguards assets
- Pays income distributions
- Monitors ACD
- On investment/borrowing limits
- Deals with any wind-up of fund
3
Q
What are the benefits of an investment trust vs an OEIC?
A
- Charges likely lower
- Gearing
- Potential discount to NAV
- More flexible
- Board able to change manager
- GDon’t have to sell underlying investments
- Wider range of investments can be held
- Real-time pricing
4
Q
What are the potential causes of tracking error in an ETF?
A
- Type of replication method
- Management fee
- Other expenses
- Currency hedging
- Any uninvested cash
- Dividend reinvestment lag
- Withholding tax
- Securities lending
5
Q
What factors would an adviser consider when deciding between an OEIC and an ETF?
A
- Charges
- Tracking error
- Standard deviation
- Dealing frequency
- Alpha
- Concentration risk
- Dividends
- Style - active vs passive
- Counterparty risk
6
Q
What ways can an investment trust raise money?
A
- Rights issue
- Placement
- Gearing
- Issue bonds
7
Q
What are the potential risks of investing in ETFs?
A
- Currency
- Concentration
- Market
- Counterparty
- Passive/product
