CIFC Mutual Fund Sales and Distribution Flashcards

What is Net Asset Value Per Unit (NAVPU) in a mutual fund?

Answer: The total net assets of the fund divided by the number of units outstanding

NAVPU is calculated by dividing the fund's total net assets (assets minus liabilities) by the number of units outstanding, representing the price per unit.

What is a switch (exchange) in mutual fund investing?

Answer: Redeeming units of one fund and using the proceeds to purchase units of another fund, often within the same fund family

A switch allows investors to move money between funds — typically within the same fund family — and may trigger a taxable disposition in non-registered accounts.

Which of the following best describes a balanced mutual fund?

Answer: A fund that holds a mix of equities and fixed-income securities to balance growth and income

A balanced fund maintains a blend of stocks and bonds, seeking to provide moderate growth while limiting volatility through diversification across asset classes.

What does 'early redemption fee' typically discourage in the context of mutual funds?

Answer: Short-term trading that disrupts fund management and harms long-term investors

Early redemption fees are designed to deter market timing and frequent trading, which can force portfolio managers to maintain excess cash and disadvantage remaining investors.

Under NI 31-103, what is the 'know your product' (KYP) obligation for mutual fund registrants?

Answer: Registrants must understand the structure, risks, costs, and suitability of products they recommend

KYP requires registrants to conduct sufficient due diligence on any product they recommend so they can assess its suitability and explain its features, risks, and costs to clients.

What is the purpose of a fund's Statement of Investment Policies and Procedures (SIPP)?

Answer: To document the rules and guidelines governing how the fund's portfolio is managed and what it can invest in

A SIPP establishes the investment guidelines, permitted asset classes, concentration limits, and risk controls that govern how the fund manager invests on behalf of unit holders.