1040690
Description
Flashcards by callum.thomson, updated more than 1 year ago
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Created by callum.thomson
over 10 years ago
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| Question | Answer |
| Independent Financial Advisers | unbiased financial advice from whole of market |
| Tied Agents | can only advise on products of one provider |
| Multi tied agents | recommend from a limited panel of providers |
| Wealth Management Services can be offered either on a | Discretionary Basis or Non Discretionary/Advisory basis |
| Fund supermarket is an | internet based one stop shop for retail investment funds |
| A wrap platform is | similar to a fund supermarket but used by advisors - may have pension plans and investment bonds as well as funds |
| Fund of funds can be either fettered or unfettered what does this mean | fettered invests only in funds run by the same management group. unfettered can invest in any |
| a multi manager product does what | runs segregated mandates by individually selected fund managers |
| Variants of Collective Investment Schemes are called | Mutual Fund - US SICAV - Europe Unit Trust or OEIC - UK & Ireland |
| UCITS funds do what | comply with EU rules; seen as measure of quality and marketed in Middle East & Asia as result |
| Benefits of Collective Investment | economies of scale diversification professional investment management access to markets, assets classes or investment strategies not normally available to individual investor possible tax deferral the benefit of regulatory oversight |
| What is the key difference between an authorised and unauthorised fund | Only authorised funds can be marketed to retail investors |
| Open ended funds can do what | issue and redeem shares at any time. |
| Management Fees are | the cost of the investment adviser managing the portfolio |
| Distribution and services fees are | the fees paid to cover marketing and selling shares, responding to investor enquiries |
| Other expenses are | custody charges, legal & accounting expenses and other administrative expenses |
| front end load is what | a sales charge made at purchase of fund paid to broker |
| purchase fee is what | a fee paid to the mutual fund to cover costs of purchase |
| A back-end load is | a fee paid when shares are sold aka deferred sales charge |
| What is a Redemption fee | paid by an investor to the fund when redeeming |
| An exchange fee may be charged when | an investor wants to switch to another fund within the same group or family of funds |
| 3 typical shares classes of mutual funds Class A Class B Class C | A - impose for end load but lower annual expenses B - impose back end load and operating expenses C - impose operating expenses and front end load but at lower level than A & B. Typically higher annual costs |
| When is a share trading at a premium | When the share price is above the net asset value |
| When is a share trading at a discount | When the share price is below the Net Asset Value |
| What is an ETF | An exchange traded fund, listed and traded on Stock Exchange which typically tracks the performance of an index |
| What are the 2 types of Index Replication for ETF | Physical or Synthetic |
| Describe Physical Replication | Can be achieved by either Full replication or Sampling. Full the funds tries to mirror the index by holding shares in exactly the same proportion as in the index itself. Sampling - choosing shares which are representative of the index |
| How does an ETF achieve Synthetic Replication | By entering into SWAP agreements with 1 or more counterparties |
| Advantage of Physical Replication | Simplicity |
| Disadvantages of Physical Replication | Higher Costs as more trading Greater Tracking Error |
| Advantages of Synthetic Replication | Lower costs Lower tracking error |
| Disadvantage of Synthetic Replication | Greater counterparty risk |
| 4 potential benefits of a Structured Product are | Possible Capital Protection Tax efficient access to fully taxable investments enhanced returns reduced risk |
| 4 ways Private Equity can recoup investment in business | the investee company buys it out the PE firm sells it shares to another investor trade sale - sale of the company shares to another firm the company achieves a stock market listing |
| Sukuk Investments are | Islamic bonds linked to underlying tangible/intangible assets . |
| money weighted return does what | compares the value of a portfolio from the start of period, plus capital introduced with the end value |
| time-weighted return | was designed to remove the distortion of capital being introduced/withdrawn from calculating portfolio performance |
| what is the usual benchmark for risk free rate of return | short dated government bonds or treasury bills |
| what is the risk premium | the additional return above the risk free rate of return |
| What is volatility | the changes in a share's value |
| High volatility means | a security's price can change dramatically in short periods of time |
| Low volatility means | the security's price does not fluctuate dramatically |
| How is volatility measured | By standard deviation of the returns from the mean |
| What is Total Return | The return achieved taking into account growth in capital value plus income received |
| What is Beta | A measure of the average historic sensitivity of a fund's return to the wider market |
| Beta of 1 means | the stock has the same volatility as the market as a whole |
| Beta greater than 1 means | the stock will be expected to move more than the market as a whole |
| A beta of 1.5 means | it has a volatility 50% greater than the market portfolio i.e. it can be expected to move half as much again or for every 1% market move it moves 1.5% |
| Beta of less than 1 means | the stock is less volatile than the market so can be expected to move less e.g. 0.7 means 30% less |
| Alpha is what | the return of any outperformance of a fund/portfolio against it's benchmark |
| Unsystematic risk is | company specific risk |
| Systematic risk is | risk stemming from broad equity market movements or market risk derived mainly from changes in economic factors |
| Systemic risk refers to | the breakdown of the financial system |
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