Training Courses

Collective Investment Schemes Explained

Category: Investment Products

Course level: Introductory

In house

This one-day course covers the range of open-ended Collective Investment Schemes (CISs) in the UK and EU markets.

It includes regulations, marketing and distribution, investment and borrowing powers, pricing and dealing. It also covers new EU regulations, including UCITS II and III, as well as the new FSA COLL sourcebook for CISs.

No prior knowledge is assumed and all terms will be fully explained.

Case studies form an integral part of the course, to allow the delegates to consolidate the information and provide the basis for group discussions.  

Objectives

By the end of this course, delegates will have a greater understanding of:

  • The open-ended products available in the market
  • Marketing and fund distribution
  • Role of the trustee, depositary, manager and administrator
  • How to calculate NAV and dealing price
  • Effect of the dilution levy and/or swinging mid price
  • Investment and borrowing regulations

Length

1 day

Course Content

Features of CISs

Pooled vehicles
Open-ended
Authorised vs unauthorised
Principle of risk spreading

Types of CIS

Unit trusts
SICAVs, OEICs, ICVCs
UCITS SICAVs vs non-UCITS SICAVs

Fund distribution

Fund distribution channels
   Advisers, banks, sales teams, etc.
EU Financial Promotion rules
   Advertising, cold calling, etc.
Distance Marketing Directive
Fund authorisation for cross border marketing

UCITS II – Short form prospectus

Changes from current Key Features documents
FSA Policy Statement 05/5
Rules for marketing of UK funds in Europe
Rules for SICAVs marketing into the UK
Risk and charges disclosure
TER calculations
RIY calculations
Potential for managing overseas funds
 
Business relationships

Role of the ACD and manager
Role of the depositary
Enforcing the investment rules
Dealing with pricing errors
Safeguarding investors
Role of the administrator
   Fund valuation – capital and income accounts
   Fund pricing
   Statutory reporting – structure of report and accounts, tax

Pricing open-ended funds
 
Forward vs historic pricing principles
Calculating NAV
Calculating the creation, bid and offer price for dual-priced funds
Worked example: Calculating the price of a dual-priced fund
Calculating the mid price for single priced funds
   Dilution levy vs swinging mid price
Worked example: Calculating the price of a single-priced fund
Case study: Looking at published fund prices for single- and dual-priced funds

Dealing in open-ended funds

Processing buying and selling orders
Cash vs in specie payments

Creations and cancellations

Role of the depositary and operator of the fund
Handling cashflows in funds
Managing a box
Fractional shares

Charges and expenses

Initial charges
AMC
Switching fees
Performance fees (COLL)
   Focus fund charges
 

UCITS III

Wider investment powers
Mixed funds, wider use of derivatives, new investment limits
Limited issue funds
Guaranteed funds
Fund of funds
New spread rules
CESR consultation on eligible assets – use of derivatives, tracking methods, MMIs
Time line for implementation

Investment and borrowing powers (UCITS III, COLL 5)

 

Approved securities
Spread and concentration rules
Mixed funds
Using derivatives
   EPM rules, shorting opportunities, new rules for cover
Funds of funds
Case study: Looking at the current investment strategy of a CIS using a monthly report

Income distribution

Sources of income
Income accrual
Income distribution
Equalisation
Worked example of equalisation calculation

Fund accounting

Capital and revenue accounts
Income and expenses
Case study: Looking at a CIS income statement

Taxation

Fund taxes
   Corporation tax, withholding tax, SDRT, VAT
Investor taxes
   CGT, income tax, SDRT
 

Corporate governance

Necessary report and content
Shareholder meetings
The IOSCO consultation
IMA SORP
The impact of FSA DP05/03

Changes in the funds industry

Transition to COLL
   Non-UCITS retail schemes vs UCITS retail schemes
   Alignment of AUT and OEIC rules
       Single vs dual pricing
       Multiple unit classes
       Marketing and promotion costs
   Limited issue schemes
   Performance fees
   Short form reports

UK Qualified Investor Schemes
   Product innovations (e.g., property funds, funds of offshore funds)
   Shorting potential
   Gearing rules

HMT changes
   Significant influence rule (taxation changes)

 

This course would be suitable for:

  • Client services and call centres
  • Finance and accounting
  • HR and training
  • Investment administration and operations
  • Investment professionals
  • IT and software developers
  • Legal & Compliance
  • New entrants
  • PR and recruitment firms
  • Risk management
  • Sales and marketing
  • Senior managers

This course would be suitable for these exams:

  • IMC
  • SII IAQ - Collective Investment Schemes
  • UKSIP - Investment Operations
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