Unit 3: Pooled Investments Flashcards
Open-ended fund cannot:
-short
-use margin
-jt acct with outside entities
-acquire 3% outstanding shares of any company
Closed-end fund characteristics
-trades in market
-price differs from NAV
-can issue preferreds and debt
LOI & Breakpoint
Can be used to lower sales charge
-up to 13 months from now and 90 days in the past
Sales Charge % is based on
POP, not NAV
commission/(NAV+commission)
Private funds
typically invests in companies with operating history
Venture Capital
used for companies not yet in operation
Hedge Fund
high minimums, lock up provisions, the PM is usually registered as IA
REITs
Must have
-75% in real estate/cash
-75% gross income from RE
-90% taxable income must be distributed
For test, assume they are tradable/liquid
Primary advantage of mutual fund is
diversification
Benefit of exchanges within family of funds
is avoiding additional sales charges, not avoiding taxes.
A pension plan trustee can receive
breakpoint discounts
Money markets are considered more liquid than
common stock
Hedge Fund “2 and 20” is not considered
high management fees
Calc NAV
Unpaid Securities and Accrued management fees are considered liabiliities
Mutual Fund Investment Advisor contract
Initial is for two years, then renewed annually
-cannot be unilaterally assigned out
