OEIC

Question 1

What is the legal structure of an OEIC

Answer 1

A company but not the Companies Act so not listed - allows them to expand/contract

Question 2

What are 3 features of OEICS

Answer 2

Pooled then invested collectively - valued on NAV

Retail, non retail UK UCITS and QIS

Investors interests represented by shares in company

Question 3

What is the regulatory structure (5)

Answer 3

Authorised by the FCA

Operated by Authorised Corporate Director

Assets held by independent depositary

Both must be authorised/regulated by FCA

Regulated by COBS

Question 4

Give 5 differences between unit trust and oeic

Answer 4

co with legal structure v trust with deed

single priced (reflects nav) vs dual priced

shares not units

acd/depositary vs fund manager and trustee

initial charges included in price vs added to offer price

Question 5

what are umbrella funds (oeics)

Answer 5

sub funds that can have different classes and objectives.

Must all use same pricing basis

can switch between without selling and triggering tax

Question 6

What are the borrowing rules for an OEIC?

Answer 6

Temporary and no more than 10%

Question 7

What are the 5 requirements of an acd to do

Answer 7

compliance with investor protection requirements
regulations
* maintaining a register of shareholders;
* day-to-day management issues, such as valuation, pricing and dealing;
* preparation of accounts; and
* management of investments

Question 8

4 responsibilities of depositary

Answer 8

• valuation, pricing and dealing in OEIC shares;
• collection of income and authorising the payment of income distributions;
• ensuring the ACD correctly exercises the investment and borrowing powers; and
• safekeeping of assets.

Question 9

4 OEIC reporting requirements

Answer 9

• report to holders twice a year – once at the interim stage (unaudited) and once at the
  annual stage (audited);
• produce reports that comply with the OEIC’s Statement of Recommended Practice;
• issue short-form accounts; and
• make available full accounts, if requested.

Question 10

What is single pricing

Answer 10

uses mid market of underlying asset

Question 11

What is a dilution levy

Answer 11

covers dealing costs and cost of spread of underlying assets

Can be applied if large outflows/in flows

Fund also has option of swing pricing instead

Question 12

3 advantages of oeics

Answer 12

can be marketed across europe unlike trusts

Umbrella easier to switch

Umbrella easier to create new

Question 13

what is the CT regime for OEICS

Answer 13

CT on income but not gains