Discretionary

Question 1

Fees chargeable if investing with a discretionary fund manager

Answer 1

• platform/wrapper fee
• discretionary managers initial charge
• discretionary managers AMC
• underlying fund manager charge
• dealing fees
• BO spread
• stamp duty reserve tax
• panel on takeover and merger levy
• ## VAT

Question 2

Four advantages of self selecting shares

Answer 2

• control
• lower costs
• concentrated portfolio can deliver greater returns
• not subject to managers short term performance pressures

Question 3

Four advantages of a managed portfolio

Answer 3

• diversification
• access to more possible investments
• managers expertise
• less admin
• more protection/ regulation

Question 4

Benefits to self select shares (5)

Answer 4

• control
• no advice charges
• lower ongoing costs
• share voting rights
• speed of transactions

Question 5

Five disadvantages to self select shares (5)

Answer 5

• no access to professional management
• less access to institutional funds
• time required to manage
• less regulation/ protection

Question 6

Explain why a DFM May purchase a collective investment (4)

Answer 6

• diversification
• access to assets otherwise not available / commercial property
• access geographical investments
• access to specialist knowledge
• cheaper
• using passives as a core and satellite approach

Question 7

Basis of advisory investment management and advantages (3)

Answer 7

• recommendation made to buy or sell and investment
• client then needs to give agreement first
• advantage is greater level of control
• and involvement

Question 8

Basis of description art fund management/advice and benefits (4)

Answer 8

• manager/adviser has right to buy or sell investments
• without seeking approval from client
• need to up date client on a pre agreed regular basis

Benefits:

• less responsibility regarding decisions for client
• investment timings can be made more easily