Chapter 7 - Investment funds

  • Created by: sophie000
  • Created on: 23-11-18 11:47
Collective investment schemes
Pool the resources if a alrger numer of investors, with the aim of pursuing a common investment objective
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Direct investment
When an individual personally buys shares in a company
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Indirect investment
When an individual personally buys a stake in an investment fund
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Active management
Seeks of outperform a predetermined benchmark over a specified time period. Top down = the manager focuses on economic and industry trends. Bottom up = the analysis of a company's net assets, future profitability and cash flow is a priority
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Passive management
AKA index tracking or indexation which involves constructing a portfolio in such a way that it will track, or mimic, the performace of a recognised index
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The investment association
trade body for authorised open ended funds indusrty; it maintains a system for classifying funds
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'Undertaking for Collective Investment in Transferable Securities' - refers to a series of EU regulations that were originally designed to facilitate the promotion of funds to retail investors across Europe
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'Non-UCITS Retail Scheme - funds that are deemed by the UK regulator to be suitable for retail investors. Allows for direct invesment in property
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Unit trusts
Trustee is legal owner, unit holders are beneficial holders, investors buy units, open - ended
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'Open-Ended Investment Companies' - CIS structured as a company, with the investors holding shares. They invest shareholder's money in a diversed pool of investments
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Single pricing
Use of mid-market prices of the underlying assets to produce a single price e.g. OEICS
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Dual pricing
Involves using the market's bid and offer prices of the underlying assets to produce separate prices for buying and selling of shares/units in the fund e.g. unit trusts
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Annual management charge
Applied to cover the ongoing costs of the managem,tn and administration of the fund
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Investment trusts
A listed company that has directors and shareholder
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'Real Estate Investment Trusts' - investment companies that pool investors' funds to invest in comercial and residential property. They provide access to propety returns without the previous disadvantage of double taxation
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Pay no tax on property income or capital gains on property disposals, provind at least 90% of that income (after expenses) is distributed to shareholders
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May be held in both individual savings accounts and self-invested personal pension schemes - closed ended
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An exchange-traded fund
An investment fund usually designed to track a particular index - open ended and use passive management
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Synthetic replication
Involves the fund manager entering into a swap with a market counterparty ti exchange the returns on the index for a payment
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Hedge funds
Sought to eliminate or reduce market risk - high risk
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Private equity
medium to long term finance, provided in return for an equity stake in potentially high-growth companies.
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Other cards in this set

Card 2


Direct investment


When an individual personally buys shares in a company

Card 3


Indirect investment


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Card 4


Active management


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Card 5


Passive management


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