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Collective Investment Schemes M3 Flashcards

6 cards from real CMFAS practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

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  1. What is an index fund?

    Answer: A fund that tracks and replicates the performance of a specific market index

    An index fund is a passively managed fund that seeks to replicate the performance of a specific market index, such as the Straits Times Index.

  2. What is the difference between active and passive fund management?

    Answer: Active managers try to outperform the market; passive managers track an index

    Active management involves selecting investments to beat a benchmark, while passive management replicates an index. Active funds typically have higher fees.

  3. What are the key risks associated with investing in a CIS?

    Answer: Market risk, liquidity risk, currency risk, and manager risk

    CIS investments face multiple risks including market risk (prices fall), liquidity risk (unable to sell), currency risk (exchange rate changes), and manager risk (poor decisions).

  4. What is a hedge fund?

    Answer: An alternative investment fund that uses advanced strategies to generate returns

    Hedge funds use advanced investment strategies such as leverage, short selling, and derivatives to seek absolute returns regardless of market conditions.

  5. What is the minimum subscription amount for a restricted CIS in Singapore?

    Answer: $200,000

    A restricted CIS can only be offered to accredited investors or in minimum subscription amounts of $200,000 or more.

  6. What is the benchmark for measuring a fund's performance?

    Answer: A market index or reference rate against which the fund's returns are compared

    A benchmark is a standard (usually a market index) against which a fund's performance is measured to evaluate whether it is doing well.

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Sources & references

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  1. ibf.org.sg — Eligibility, fees, score release, registration, retake policy, exam format, passing score, time limit · verified Oct 2026