Podcast
Questions and Answers
What is a core element of a Dealing Representative's role?
What is a core element of a Dealing Representative's role?
- Selling individual stocks
- Understanding different types of mutual funds (correct)
- Managing real estate investments
- Providing tax advice to clients
How long does Unit 6: Types of Mutual Funds take to complete?
How long does Unit 6: Types of Mutual Funds take to complete?
- 4 hours
- 3 hours and 15 minutes
- 2 hours and 30 minutes (correct)
- 1 hour and 45 minutes
What type of mortgages do most mortgage securities hold?
What type of mortgages do most mortgage securities hold?
- Commercial mortgages
- National Housing Act (NHA) mortgages (correct)
- Variable rate mortgages
- Government-insured mortgages
Which lesson in Unit 6 covers the introduction to mutual funds?
Which lesson in Unit 6 covers the introduction to mutual funds?
What are the main types of mutual funds mentioned in the text?
What are the main types of mutual funds mentioned in the text?
Why do mortgage funds typically pay higher income than money market funds?
Why do mortgage funds typically pay higher income than money market funds?
What is the primary role of the Canada Mortgage and Housing Corporation (CMHC)?
What is the primary role of the Canada Mortgage and Housing Corporation (CMHC)?
What is a key benefit of mutual funds according to the text?
What is a key benefit of mutual funds according to the text?
How is the income from mortgage funds distributed to investors?
How is the income from mortgage funds distributed to investors?
Which aspect of mutual funds is crucial for addressing clients' diverse investment requirements?
Which aspect of mutual funds is crucial for addressing clients' diverse investment requirements?
What happens to the principal repayment in a mortgage fund?
What happens to the principal repayment in a mortgage fund?
What kind of mutual fund is growth-oriented according to the text?
What kind of mutual fund is growth-oriented according to the text?
What should a Dealing Representative focus on to make suitable recommendations for clients?
What should a Dealing Representative focus on to make suitable recommendations for clients?
How does a decrease in interest rates affect a mortgage fund's price?
How does a decrease in interest rates affect a mortgage fund's price?
Why does a mortgage fund invest in short-term bonds?
Why does a mortgage fund invest in short-term bonds?
How are mortgage securities structured for sale in the secondary market?
How are mortgage securities structured for sale in the secondary market?
What type of income do Global Equity Funds typically provide?
What type of income do Global Equity Funds typically provide?
How are Sector Funds characterized in terms of their investment focus?
How are Sector Funds characterized in terms of their investment focus?
What is the risk classification for International Equity Funds?
What is the risk classification for International Equity Funds?
Which investors are typically suited for Sector Funds?
Which investors are typically suited for Sector Funds?
What type of income do Sector Funds typically provide?
What type of income do Sector Funds typically provide?
How do Global Equity Funds mitigate some risks compared to other types of funds?
How do Global Equity Funds mitigate some risks compared to other types of funds?
Why should investors in Sector Funds have a long time horizon?
Why should investors in Sector Funds have a long time horizon?
What is the main distinguishing feature of Sector Funds compared to other mutual funds?
What is the main distinguishing feature of Sector Funds compared to other mutual funds?
What is the main type of income generated by Real Property Funds?
What is the main type of income generated by Real Property Funds?
Why are Real Property Funds considered high risk investments?
Why are Real Property Funds considered high risk investments?
What is the main type of investment strategy employed by Commodity Pool Funds?
What is the main type of investment strategy employed by Commodity Pool Funds?
What is a key characteristic that sets Commodity Pool Funds apart from traditional mutual funds?
What is a key characteristic that sets Commodity Pool Funds apart from traditional mutual funds?
What type of investors are Real Property Funds typically suitable for?
What type of investors are Real Property Funds typically suitable for?
Why are Real Property Funds less liquid compared to other mutual funds?
Why are Real Property Funds less liquid compared to other mutual funds?
What is the primary focus of Real Property Funds in terms of holdings?
What is the primary focus of Real Property Funds in terms of holdings?
What regulatory body governs the operation of Commodity Pool Funds?
What regulatory body governs the operation of Commodity Pool Funds?
What is the primary focus of target date funds?
What is the primary focus of target date funds?
How do target date funds differ from balanced funds?
How do target date funds differ from balanced funds?
In target date funds, why does the mutual fund portfolio hold a greater percentage in equities in the early stages?
In target date funds, why does the mutual fund portfolio hold a greater percentage in equities in the early stages?
What distinguishes asset allocation funds from other types of mutual funds?
What distinguishes asset allocation funds from other types of mutual funds?
Why may asset allocation funds be considered higher risk than balanced funds?
Why may asset allocation funds be considered higher risk than balanced funds?
How do target date funds differ from asset allocation funds?
How do target date funds differ from asset allocation funds?
What is the main objective of changing asset allocation in mutual funds?
What is the main objective of changing asset allocation in mutual funds?
Why do asset allocation funds have varying risks?
Why do asset allocation funds have varying risks?
Study Notes
Mutual Funds Introduction
- Mutual funds are a core element of a Dealing Representative's role
- Understanding the structure of each fund type and how they meet different investment goals is essential for making suitable recommendations for clients
Types of Mutual Funds
- Mortgage Funds:
- Invest in mortgage securities, which are pools of mortgages combined together
- Typically pay higher income than money market funds
- Income is a combination of principal repayment and interest payments on mortgages
- Principal repayment is retained in the fund and used to purchase new mortgages
- Interest is distributed to the fund's unitholders
- Fund's price is affected by interest rates
- International Equity Funds:
- Investment objective: long-term growth
- Type of income: capital gains and foreign income
- Holdings: common shares of foreign companies
- Client suitability: investors who already have Canadian and U.S. investments, and want to add international investments to their portfolios
- Risk classification: medium, medium to high, high
- Sector Funds:
- Investment objective: long-term capital appreciation
- Type of income: capital gains, dividends, and other income
- Holdings: common shares of corporations in a specific industry, sector, or geographical region
- Client suitability: investors who have a higher risk profile
- Risk classification: high
- Real Property Funds:
- Investment objective: long-term growth
- Type of income: capital gains, dividends, and other income
- Holdings: residential, commercial or industrial properties, and in securities from companies involved in real estate management or development
- Client suitability: investors who want exposure to the real estate sector
- Risk classification: high
- Commodity Pool Funds:
- Investment objective: capital growth
- Permitted to use or invest in specified derivatives and physical commodities beyond what is permitted by National Instrument 81-102
- Governed by National Instrument 81-104
- Employ alternative trading strategies for their portfolios
- Asset Allocation Funds:
- Investment objective: income and long-term growth
- Type of income: interest, dividends, and capital gains
- Holdings: common shares and bonds
- Client suitability: investors seeking income and growth
- Risk classification: low to medium, medium
- Target Date Funds:
- Investment objective: provide a balance of income and long-term capital growth, relative to the target date
- Focus on a specific future date and changes the asset mix throughout the life of the fund
- Purpose: to meet an investment goal at a specific time in the future, such as the start of an investor's retirement or a child's post-secondary education
- In the early stages, the mutual fund portfolio holds a greater percentage in equities
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Description
Learn about the different types of mutual funds and how they can help meet investment goals. Understand the structure, history, and benefits of mutual funds to make suitable recommendations for clients as a Dealing Representative.
