Module 51.2: Asset Management and Pooled Investments

Question 1

What are buy side firms and sell side firms?

Answer 1

buy side - asset management firms

sell side - broker-dealers and investment banks

Question 2

What is the difference between full-service asset managers, specialist asset managers, and a multi-boutique firm?

Answer 2

full service - variety of investment styles

specialist - may focus on particular investment style

multi-boutique - holding company that includes a number of specialist asset managers

Question 3

What are robo-advisors?

Answer 3

technology that can offer investors advice and recommendations based on their investment requirements and constraints using computer algorithms.

Question 4

What is an open-end fund and closed end fund relating to mutual funds?

Answer 4

investors can buy newly issued shares at the NAV.

closed end fund - professionally managed pools of investor money that does not take new investments.

Question 5

What is a money market fund?

Answer 5

invest in short-term debt securities and provide interest income with very low risk of changes in share value.

Question 6

Why is the NAV of ETF’s closer to the NAV of the underlying rather than a mutual fund?

Answer 6

mutual fund prices can differ significantly based on investor supply and demand.

Question 7

Compared to ETF’s, open ended mutual funds have less of what?

Answer 7

brokerage costs, because open-end mutual funds do not have brokerage costs.