Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

International Introduction to Investment > Investment Funds > Flashcards

Investment Funds Flashcards

1
Q

What is a direct investment?

A

Where an individual personally buys shares.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What is a indirect investment?

A

Where an individual buys a stake in an investment fund.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What are collective investment schemes?

A

Where investor funds are pooled together.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What does CIS stand for?

A

Collective Investment Scheme.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

What are investment funds also known as?

A

Mutual Funds, unit trusts or OEICs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What constitutes a UCITS fund?

A

A fund that is set up in Europe but marketed internationally.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What does UCITS stand for?

A

Undertakings for Collective Investment in Transferable Securities.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the EU UCITS directives seen as a measure of?

A

Quality.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What location is the main hub for investment funds?

A

Luxembourg.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What is an OEIC in Luxembourg called?

A

A SICAV.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What does SICAV stand for?

A

Societe Investisement a Capital Variable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What types of fund of those set up in the UK or Jersey likely to be?

A

OEIC or a unit trust.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

What does ICVC stand for?

A

Investment Company with Variable Capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are the benefits of pooled funds?

A

Diversification, access to management, regulation and tax deferral.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

How can the risk of one investment be offset?

A

By have a diverse portfolio.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Who manages a fund?

A

A fund manager.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is passive fund management?

A

When a portfolio is set up to mimic the performance of a recognized index.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What is assumed in passive investment management?

A

That the index markets are effectively priced.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

What are the advantages of passive management?

A

Less expensive and few active managers out perform benchmark indices.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are the disadvantages of passive management?

A

Tracking errors can occur, can only invest in dividends once they are received and it will follow the market down in bear markets.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is active fund management?

A

Where the fund manager seeks to outperform a predetermined benchmark and employs technical analysis to forecast future events.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

What is top down active management?

A

Where the manager focuses on economic and industry trends.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

What is bottom up active management?

A

Where the manager focuses on company specific indicators.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What are the 3 styles within the bottom up approach?

A

Growth investing, value investing and momentum investing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
What is growth investing?
Picking shares with significant growth opportunities in the long term.
26
What is value investing?
Picking shares that are undervalued relative to present o future profits.
27
What is momentum investing?
Picking shares where the price is rising.
28
What is contrarian investing?
Picking shares with hidden value.
29
What is core satellite management?
Where both passive and active management styles are used within one portfolio.
30
What is the alternative to the active/passive managed funds approach?
Smart beta funds.
31
What are smart beta funds?
They combine passive and active management and seek to outperform passive strategies by targeting value creating ideas.
32
What is the main characteristic of an OEIC?
That shares can be issued and redeemed and it expands or contracts based on investor demand.
33
What are OEICs called in the US?
Mutual Funds.
34
What is the legal name of a mutual fund?
An open ended company.
35
Where does one buy or sell shares in a mutual fund?
From the fund itself.
36
What is the share price of a mutual fund based on?
The funds NAV.
37
What does NAV stand for?
Net asset value.
38
Who manages a mutual fund?
Advisers.
39
What does SEC stand for?
Securities Exchange Commission.
40
How often does a mutual fund value its portfolio?
Daily.
41
What type of tax is payable on a stake in a mutual fund?
Income tax on dividends or any gains made when shares are sold and maybe on capital gains.
42
What are the 3 types of European fund?
SICAVs, unit trusts and OEICs.
43
What is UCITS?
EU regulations that were designed to promote funds to retail investors.
44
What does a UCITS fund first seek authorization as?
A UCITS fund.
45
What non-EU countries also recognize UCITS funds?
Switzerland and Hong Kong.
46
What are the main characteristics of a SICAV?
An investment company with variable capital, are open ended, valued daily, single priced and structured as an umbrella fund.
47
What is the difference between an FCP and a unit trust?
An FCP does not have a legal personality and is based on a contract between investors and managers.
48
Who is the legal owner of a unit trust?
The trustee.
49
Who is the beneficial owner of a unit trust?
The unit holders.
50
What is the difference between a unit trust and an open ended investment company?
The parties involved and how the units are priced.
51
Who are the two main parties in a unit trust?
The Trust Manager and the Trustee.
52
What does the trust manager of a unit trust do?
Decides which investments are included in the portfolio, what to buy and when and provides market daily pricing.
53
What does the Trustee of a unit trust do?
Is the legal owner of the assets, protects the interests of investors and monitors the trust manager.
54
Who is usually appointed as Trustee of a unit trust?
Large insurance companies or banks.
55
Are unit trusts open or close ended?
Open.
56
What is the unit price of a unit trust based on?
The NAV.
57
Is a unit dual or single priced in a unit trust?
Dual.
58
How is the portfolio of a unit trust valued?
Daily for bid and offer prices, which produces 2 NAVs.
59
What is the difference between the bid and offer price called?
The bid offer spread.
60
What are OEICs known as in Ireland?
Variable Capital Company.
61
What does VCC stand for?
Variable Capital Company.
62
What is required when setting up an OEIC?
An Authorised Corporate Director and a Depository.
63
Who holds an OEICs investment?
The depository.
64
Who is the legal owner of an OEIC?
The depository.
65
Who is the beneficial owner of an OEIC?
The OEIC itself.
66
Who maintains the shareholder register of an OEIC?
The Authorised Corporate Director.
67
Is an OEIC single or dual priced?
Can be either but typically is single and refers to the mid market value.
68
If a fund is single priced what will its value be based on?
The mid market value of its underlying investments.
69
What constitutes a CEIC?
A company where there are a set number of shares issued to the investing public and the capital is fixed.
70
In what jurisdictions can CEICs be found?
US and Europe.
71
What are CEICs known as in the US?
Close ended funds.
72
What type of fund is allowed to invest in more illiquid assets than mutual funds?
Close ended funds.
73
What is the definition of an illiquid security?
A security that cannot be sold within 7 days.
74
What does UIT stand for?
Unit Investment Trust.
75
What is a unit investment trust?
A fund that does not actively trade but buys a fixed portfolio of securities.
76
How does a close ended fund raise capital?
By making an IPO.
77
What are CEICs known as in Europe?
Investment Trusts or Companies.
78
What was the first investment trust called?
Foreign and Colonial Investment.
79
Who are the parties in an investment trust?
Directors and shareholders.
80
What is a split capital investment company?
An investment company that has both ordinary and preference shares.
81
What type of investment fund is allowed to borrow long term?
A CEIC.
82
When an investment trust buys stocks and shares using borrowed money what is this called?
Gearing or leverage.
83
Who buys and sells units in a unit trust?
The fund manager.
84
Who buys and sells shares in an OEIC?
The ACD.
85
Who buys and sells shares in a CEIC?
A stock exchange.
86
Which type of investment funds value is not based on the underlying assets?
A CEIC.
87
What is the definition of trading at a premium?
If the share price is above the NAV.
88
What is the definition of trading at a discount?
If the share price is below the NAV.
89
What does REIT stand for?
Real Estate Investment Trust.
90
Where can REITs be found?
The UK, US, France, Australia and Canada.
91
What is a REIT?
A trust that pools investor funds into commercial and residential property.
92
What is the main benefit of a REIT?
It provides access to property returns without double taxation.
93
What type of tax is not payable on a REIT?
Corporate tax.
94
What type of fund is a REIT?
A close ended fund.
95
Are REITs quoted on stock exchanges?
Yes.
96
What does ETF stand for?
Exchange Traded Fund.
97
What does an ETF do?
Tracks a recognized index.
98
Are ETF shares quoted on stock exchanges?
Yes.
99
What type of fund is an ETF?
A open ended fund.
100
What type of management approach does an ETF use?
Passive.
101
What type of indices are ETFs based on?
Market capitalization weighted indices.
102
What are the 3 methods of physical replication that an ETF might use?
Full replication, stratified sampling and Optimisation.
103
How is synthetic replication conducted by an ETF?
The manager of the ETF will enter into a swap to exchange the returns on an index for a payment.
104
What are the shares of an ETF priced on?
The value of investments in the fund.
105
What are the returns given in an ETF?
Dividends.
106
How does one buy and sell shares in an ETF?
Through a broker.
107
What are the charges when buying or selling shares in an ETF?
A spread, annual management fee and broker commission.
108
What does an absolute return hedge fund mean?
A hedge fund that is aimed to profit regardless of market performance.
109
What are hedge funds established as?
Unauthorized and unregulated CISs.
110
What is typically the minimum investment amount of a hedge fund?
USD50,000.
111
What does CIS stand for?
Collective Investment Scheme.
112
Can hedge funds use gearing?
Yes because they are unregulated.
113
What do hedge funds usually impose for 3 months?
A lock in period.
114
How much can performance fees be in a hedge fund?
20% or more.
115
What is a high water mark?
A high-water mark is the highest peak in value that an investment fund or account has reached.
116
What is private equity provided in return for?
An equity stake in a company.
117
How can a private equity firm realize its capital gains?
By selling its shares back to management, by selling its shares to another investor, a trade sale or by a stock market listing.
118
What are private equity funds established as?
Limited partnerships.

International Introduction to Investment (9 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions