Managing Collective Investment Funds

Managing Collective Investment Funds......Page 5
Contents......Page 9
Preface......Page 15
About the authors......Page 17
Collective investment funds......Page 19
Managing collective investment funds......Page 20
Introduction......Page 23
Why funds have been expanding......Page 24
Why governments encourage development of funds......Page 25
Why people save through funds......Page 26
Who invests in funds......Page 32
Building a successful fund management business......Page 34
Additional functions required by regulation......Page 37
Key roles and responsibilities......Page 39
Role of the fund management company......Page 41
Role of the custodian......Page 43
Role of the regulator......Page 46
Ability to delegate tasks but not responsibilities......Page 47
Introduction......Page 49
Fund legal structures and their implications......Page 50
Fund operational structures and their implications......Page 59
Management structures and their implications......Page 65
Introduction......Page 69
What entities are regulated......Page 71
The regulatory system......Page 72
Key regulatory principles......Page 76
Regulatory activities......Page 79
Internal compliance......Page 87
Compensation and redress......Page 88
Regulation of foreign investment funds and foreign investment......Page 89
Introduction......Page 93
Definition and characteristics of different classes of assets......Page 94
Different investment styles......Page 96
The investment department......Page 103
Needs and constraints imposed by different types of fund and different styles......Page 110
Managing the investment process......Page 115
The ‘back office’......Page 117
Limitations imposed by investment and borrowing powers......Page 119
Introduction......Page 129
Why performance is so important......Page 130
Requirements for performance presentation......Page 131
Common measurements of fund performance......Page 133
Treatment of entry and exit fees......Page 136
Time periods......Page 138
Disclaimers and warnings......Page 140
Benchmarks......Page 141
Performance representation......Page 146
Publicising price data and performance information......Page 151
The importance of valuation......Page 155
Factors in valuation......Page 157
Valuation calculation......Page 160
Common valuation errors and problems......Page 162
Relevance to exchanges, mergers and take-overs and conversions......Page 163
Types of charges and expenses......Page 167
Trends in costs and charges......Page 180
Importance of the calculation of a correct price......Page 183
Dual versus single pricing......Page 186
Historic versus forward pricing basis......Page 189
Effect of acting as principal......Page 192
Introduction......Page 195
Closed-ended funds......Page 196
Interval funds......Page 198
Open-ended funds......Page 199
Common problems......Page 204
Registration......Page 207
Dealing with fund dividends or distributions......Page 213
Introduction......Page 217
Marketing context......Page 220
The mechanics of marketing......Page 224
Introduction......Page 235
Direct sales channels......Page 236
Indirect sales channels......Page 239
Trends in distribution......Page 244
Regulatory aspects......Page 245
Supporting distribution channels......Page 247
Introduction......Page 249
Responsibility for communications......Page 250
Mandatory communications......Page 251
Voluntary communications......Page 261
Queries and complaints......Page 263
Who management companies communicate with......Page 265
Product development is dynamic......Page 267
Fund investment objectives and their implications......Page 269
Fund structural choices......Page 274
Factors in product development......Page 277
Why funds have special accounting standards......Page 283
Users of fund accounts......Page 284
Standardisation of fund accounting......Page 285
Key principles of fund accounting......Page 286
Accounting for open-ended and interval funds versus closed-ended funds......Page 287
Two key components of fund accounts......Page 288
Accounting bases......Page 291
Potential accounting problems in developing markets......Page 294
Relationship between tax and accounting......Page 299
Taxation of funds is key to their success......Page 301
Main taxes affecting funds......Page 303
Tax incentives and funds......Page 307
‘Offshore’ domiciles and taxation......Page 316
Introduction......Page 319
Components of fund governance......Page 320
Some specific fund governance problems......Page 325
Business concepts......Page 331
Organisation and key management issues......Page 338
Planning and budgeting......Page 344
Trends in fund management......Page 355
Making profits is not as easy as they thought......Page 359
Economics of scale and cost reduction are more important than ever......Page 360
Bontiques and hedge funds......Page 361
Self-test Questions......Page 363
Answers......Page 369
References......Page 375
Index......Page 377