Collective Investment Schemes M3 Flashcards

What is a fund's prospectus?

Answer: A legal document detailing the fund's objectives, risks, fees, and terms

A prospectus is a legal document that provides comprehensive information about the fund, including investment objectives, strategies, risks, fees, and terms.

What is the sales charge (front-end load) for a unit trust?

Answer: A fee charged when you buy units, deducted from the investment amount

A front-end load or sales charge is a commission deducted upfront from the investment amount when purchasing units.

What is a money market fund?

Answer: A fund that invests in short-term, low-risk instruments like treasury bills

A money market fund invests in short-term, highly liquid, low-risk instruments such as treasury bills, certificates of deposit, and commercial paper.

What is an equity fund?

Answer: A fund that primarily invests in stocks/shares

An equity fund primarily invests in stocks (equities) of companies, aiming for capital growth over the long term.

What is a balanced fund?

Answer: A fund that invests in a mix of equities and fixed income

A balanced fund invests in a combination of equities and fixed-income securities, aiming to provide both growth and income while managing risk.

What is the bid price and offer price in unit trusts?

Answer: Bid is the price at which you sell units; offer is the price at which you buy units

The bid price is what you receive when selling units back to the fund. The offer price is what you pay when buying units. The difference is the spread.