Chapter 6 Flashcards
In order to pay interest distributions, a unit trust or OEIC must hold at least how much of it’s investments in interest bearing investments such as gilts or corporate bonds?
60%
What is the minimum amount of gross capital that a Unit Trust must hold?
£4 million
How much is the bid/offer spread for unit trusts which invest in equity funds, excluding trackers?
5% - 7%
What is the minimum number of holdings for a retail UCITS Unit Trust?
16
Is there a limit on the amount of warranties that can be held within a UCITS scheme?
No!
What is the minimum notice for raising charges within a Unit Trust?
60 days
John’s income tax liability for 2013/14 is £25,000 and for 2012/13 it was £28,000. If he invests £500,000 into an EIS in October 2013, the maximum income tax relief he could receive is?
£53,000
How much tax is deducted from an interest distribution from a Bond fund.
20%
What are the two types of Investment Trust?
Conventional
&
Split Capital
What are the features of a split capital investment trust?
Has 1 portfolio of investments as usual, but can have up to 4 different share classes with different returns & priority.
Also a limited life span (10 years)
What is the hurdle rate for Split capital Investment Trusts?
Annual growth rate for company investments to repay shares at either the current purchase price/pre determined redemption value or zero terminal asset value (wipe-out)
Types of split capital shares
Income
Capital
Zero dividend preference shares
Characteristics of Zero dividend preference shares
Limited Life
Fixed redemption dates
Issued at initial value
Taxed under CGT not income.
Who would protect the interests of investors in an OEIC?
The depository
In order for an investment fund to use the word ‘guaranteed’ in its title, what level of capital proptection does the FCA require?
100%!
