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PMT > The Investment Management Firm > Flashcards

The Investment Management Firm Flashcards

1
Q

4 advantages of corporate ownership structure to a firm’s owners

A
  • Tax and fiscal benefits
  • Supports long life business ventures
  • Creation of Brand Identity
  • Structure gives incentive to attract and retain talent
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2
Q

Compensation structures (4 types)

A
  1. Base salary
  2. Annual cash bonus
  3. Shares or share purchase options
  4. Profit sharing
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3
Q

Objective of separation of duties principle

A

minimize the potential for employee self-dealing via collusion with another individual in the firm

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4
Q

from a regulatory perspective, there are two specific positions of critical importance

A
  1. The ultimate designated person (UDP)

2. The chief compliance officer (CCO)

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5
Q

Role of ultimate designated person (UDP)

A

responsible to the self-regulatory organizations for the firm’s conduct and the supervision of its employees.

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6
Q

Role of chief compliance officer (CCO)

A

Responsible for implementing a supervision system that will provide reasonable assurance that compliance standards are being met.

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7
Q

Securities regulators allow the following three common prospectus exemptions:

A
  • Accredited investor exemption
  • Minimum investment exemption
  • Offering memorandum exemption
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8
Q

What is the minimum investment exemption and its amount?

A

allows the sale of securities to non-individual investors who make a prescribed minimum investment at $150,000.

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9
Q

What does an investment agreement do?

A

documents all aspects of the services the institutional investment management firm will provide and its relationship with the investor.

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10
Q

institutional investment managers offer their services by way of four main channels:

A
  • Pooled funds
  • Segregated/managed accounts
  • Limited partnerships
  • Sub-advisory capacity
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11
Q

What is a segregated account

A

an investment account owned by an institutional investor and managed by a third-party portfolio manager

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12
Q

difference between unit trusts and Limited partnerships structure

A

the latter offer features, such as tax-loss selling to reduce a specific client’s tax liabilities.

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13
Q

The asset mix committee is usually made up of

the following individuals (4)

A
  • Chief investment officer (Chair)
  • Head of fixed income
  • Head of equities
  • Chief economist
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14
Q

five popular styles of mandates

A
  1. Growth
  2. Value
  3. Growth at a reasonable price (GARP)
  4. Momentum (or sector rotation)
  5. Technically based
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15
Q

Offsore investments tend to be offered by two types of firms:

A

LP’s and hedge funds

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16
Q

areas of structure and operations that an institutional investment management firm must modify when offering offshore-based investment funds (5)

A
  • Legal
  • Tax
  • Custody and safe keeping
  • Security settlement
  • Unitholder services
17
Q

The fund manager’s primary responsibilities are as follows (4)

A
  • Preparing and filing the mutual fund prospectus regulatory and legal documents.
  • Ensuring service providers exercise due diligence
  • Negotiating contracts with service providers.
  • Ensuring service providers conduct activities properly
18
Q

What does the mutual fund trustee do?

A

holds the title to the property (the cash and securities) of a mutual fund on behalf of its unitholders.

19
Q

What does the custodian of a mutual fund do? (2)

A
  • holds all of the fund’s cash and securities. (Safekeeper.)

* security settlement

20
Q

What does The registrar of a mutual fund do?

A

keeps a current register of the individual owners of each unit of the fund.

21
Q

what does the independent review committee do?

A

reviews conflict of interest matters. no staff of firm can be on the committee.

22
Q

in which case does the investment manager serves as the general partner?

A

When the corporate structure is a LP

23
Q

Fees paid by unitholder (6)

A
  • Fund manager fees
  • Fund administrator (registrar) fees
  • Fund custody and safekeeping fees
  • Fund legal and audit expenses
  • Commissions and transactions fees
  • Investment management fees
24
Q

Hedge funds normally charge two types of investment management fees (give approximate % too)

A
  • Asset Based (1.5 - 2%)

* Performance based (20%)

25
Q

industry challenges. (6)

A
  • investment performance
  • access to suitable distribution
  • increased compliance requirements
  • increasing competition
  • attracting and retaining staff
  • Growth of passive investment strategies.
26
Q

What are Phantom shares?

A
  • Represent the equity of an investment management firm that is wholly owned by another company.
  • Phantom shares do not carry votes and have no realizable value upon the sale of the firm.

PMT (13 decks)

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