An Introduction to Fund Management

<p>Preface xi</p>
<p>About the author xiii</p>
<p>1 INTRODUCTION 1</p>
<p>Economic background 3</p>
<p> Money makes the world go round 4</p>
<p> Money doesn t grow on trees 5</p>
<p>Risks and rewards 6</p>
<p>Considerations 9</p>
<p>Markets 10</p>
<p>Investment instruments 11</p>
<p> Neither a borrower nor a lender be 12</p>
<p>2 ROLE OF FUNDS 13</p>
<p>Definitions 14</p>
<p>Investment businesses 15</p>
<p>Types of fund 16</p>
<p>Open–ended and closed–ended funds 23</p>
<p>Uses of funds 24</p>
<p>Associated packaging 25</p>
<p>Features and characteristics 25</p>
<p>Purpose, providers and players 25</p>
<p>Costs, benefits and comparisons 27</p>
<p>How to invest 31</p>
<p>Sales, marketing and disclosure 31</p>
<p>Categories, sectors and statistics 32</p>
<p>Investor protection 33</p>
<p> Be it enacted by the Queen s most Excellent Majesty . . . 33</p>
<p>Regulation in practice 42</p>
<p>Establishing a fund 47</p>
<p>Who wants one and why? 47</p>
<p>Options and approaches 48</p>
<p>Documents and authorisations 50</p>
<p>Launching the fund 51</p>
<p>3 PORTFOLIO MANAGEMENT 53</p>
<p>Strategies, styles, objectives and policies 54</p>
<p>Meeting investors requirements 56</p>
<p>Risks to be managed 57</p>
<p>Hedging 59</p>
<p> Please don t ask for credit . . . 62</p>
<p> You can t do that! 63</p>
<p>Asset allocation versus stock selection 65</p>
<p>Choosing the investments 66</p>
<p> First, pick your markets 66</p>
<p>Portfolio weightings and profiles 68</p>
<p>Income and growth 69</p>
<p>Liquidity 70</p>
<p>Evaluating alternatives 71</p>
<p>Data, ratios and measurements 75</p>
<p>Dealing with events 78</p>
<p>News and announcements 79</p>
<p>New issues and underwriting 81</p>
<p>Rights, splits and scrip 83</p>
<p>Breaches of regulations 85</p>
<p>4 PORTFOLIO ADMINISTRATION 87</p>
<p> Day by day in every way . . . 88</p>
<p>Buying and selling 88</p>
<p>Delivery and settlement 89</p>
<p>Registration 89</p>
<p>Custody 91</p>
<p>Use of nominees 91</p>
<p>Stock exchange reporting 93</p>
<p>Records and regulations 93</p>
<p>Portfolio accounting and controls 94</p>
<p>Profits, income and taxation 96</p>
<p>Valuation and pricing 98</p>
<p>5 INVESTOR ADMINISTRATION 103</p>
<p>Agents, agreements and delegation 104</p>
<p>Investor transactions 105</p>
<p>Registration 108</p>
<p>Communicating with investors 109</p>
<p>6 PERFORMANCE MEASUREMENT 115</p>
<p>Sector comparisons my fund is better than your fund 116</p>
<p>Yields and returns 119</p>
<p>Time– and money–weighted returns 123</p>
<p>Indices and benchmarking 127</p>
<p>Volatility and risk adjustments 130</p>
<p>7 INVESTMENT MATHEMATICS 133</p>
<p>The arithmetic of indices 134</p>
<p>Standard deviation 137</p>
<p>Capital Asset Pricing Model 139</p>
<p>Glossary 147</p>
<p>List of abbreviations 155</p>
<p>Index 157</p>