FIMA 101 Week 11: Investment Companies

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is the primary role of a Fund Manager?

To advise or recommend investment decisions to the Investment Company

To manage the daily operations of an Investment Company (correct)

To distribute shares or units of the Investment Company

To engage in the business of custodial and safekeeping of investment assets

Who is the originator, maker, obligor or creator of a security?

Investment Company Adviser

Fund Manager

Custodian

Issuer (correct)

What does FM/MFD refer to?

A Fund Manager who is also a distributor of shares or units of the Investment Company (correct)

An Investment Company Adviser who advises on investment decisions

A Custodian who is accredited by the Bangko Sentral ng Pilipinas

A Fund Manager who only manages a Fund

What is an Investment Asset?

A asset in which the funds of the Investment Company may be invested in Signup and view all the answers

Who is an Investor of the Fund?

A shareholder or unitholder of the Investment Company Signup and view all the answers

Who is accredited by the Bangko Sentral ng Pilipinas or the Commission?

A Custodian Signup and view all the answers

What is the role of an Investment Company Adviser?

To advise or recommend investment decisions with regard to the securities or other portfolio of the Investment Company Signup and view all the answers

What is a Panibio?

A credit rating agency accredited by the Commission Signup and view all the answers

What are mutual funds ideal for, aside from being a retail financial product?

Augmenting yields generated by organizational funds and enhancing their level of diversification Signup and view all the answers

What is a major advantage of mutual funds over direct investments?

Lower capital requirement Signup and view all the answers

Why do stockbrokers prefer to deal with high net worth individuals?

Because they have substantially more to invest Signup and view all the answers

What is the primary role of a professional manager in a mutual fund?

To analyze market trends and make investment decisions Signup and view all the answers

What type of investors are particularly suited to benefit from mutual funds?

Small investors Signup and view all the answers

What is a common minimum investment amount for Treasury Bills and commercial paper?

Php100,000 to Php1 million Signup and view all the answers

What is a benefit of mutual funds that cannot be matched by other investment instruments?

Combination of benefits Signup and view all the answers

What is the primary reason why mutual funds are popular investments for pension and trust programs?

Because they are professionally managed Signup and view all the answers

What is the primary goal of bond funds in terms of asset allocation?

Conservative stance Signup and view all the answers

What is a significant advantage of a large investor in mutual funds, such as negotiating for lower stockbrokerage fees?

Economies of scale in investment management Signup and view all the answers

What is the main difference between making direct investments and investing in mutual funds?

The expertise and experience of the investment manager Signup and view all the answers

What is the key characteristic that distinguishes money market funds from bond funds?

Term of investments of one year or less Signup and view all the answers

What is the primary investment focus of equity funds?

Stocks Signup and view all the answers

How can mutual funds be purchased in other countries, according to the text?

Directly from a fund, through a broker, financial planner, bank, or insurance agent, by mail, over the phone, or online Signup and view all the answers

What is the benefit of investing in balanced funds?

Access to growth potential of stocks and fixed-income instruments Signup and view all the answers

What is a benefit of investing in mutual funds, in terms of convenience?

The provision of monthly or quarterly account statements Signup and view all the answers

What is a potential trend in the popularity of mutual funds in the Philippines?

A rapid increase in popularity due to increasing convenience Signup and view all the answers

What is a key advantage of investing in mutual funds?

Ability to participate in high-yielding investments without personal portfolio management Signup and view all the answers

What is a characteristic of mutual funds that makes them attractive to investors?

The diversification of the investment portfolio Signup and view all the answers

What is a primary concern of investing in short-term instruments?

Inflation Signup and view all the answers

What is a common obstacle to effective investment management?

Lack of investment knowledge Signup and view all the answers

What is a potential use of mutual funds?

Growing money over time Signup and view all the answers

Which Act grants the Commission authority to prescribe regulations for investment companies?

Republic Act No. 2629 Signup and view all the answers

What is the purpose of regular public disclosure of financial condition, investment policies, and objectives?

To comply with the Commission's regulations Signup and view all the answers

Who is authorized to regulate Fund Managers and other parties involved in the operation of investment companies?

Securities and Exchange Commission Signup and view all the answers

What is the primary goal of investment companies, according to the Investment Company Act?

To manage funds and portfolios for clients Signup and view all the answers

What is required of investment companies in terms of their fund portfolios?

Regular public disclosure Signup and view all the answers

What is the role of the Commission in relation to investment companies?

To regulate and prescribe standards Signup and view all the answers

What is the purpose of the Securities Regulation Code (SRC)?

To regulate the securities industry Signup and view all the answers

What is the expected outcome of students after completing the week 11 lesson on investment companies?

To be able to compare the functions and products/services of investment companies Signup and view all the answers

Study Notes

Week 11 – Investment Companies

Pursuant to Republic Act No. 2629 (Investment Company Act) and Republic Act No. 8799 (Securities Regulation Code), the Securities and Exchange Commission (SEC) has the authority to regulate investment companies, requiring them to register with the SEC and comply with certain standards.

Definitions

Custodian: an independent third-party entity authorized or accredited by the Bangko Sentral ng Pilipinas or the SEC to engage in custodial and safekeeping of investment assets
FM/MFD: a Fund Manager who manages a Fund and also functions as a distributor of the shares or units of the Investment Company
Fund Manager (FM): a registered entity with an Investment Company Adviser license that manages the daily operations of an Investment Company
Investment Assets or Eligible Assets: assets in which the funds of the Investment Company may be invested
Investment Company Adviser: an Investment Company Adviser licensee who advises or recommends investment decisions with regard to the securities or other portfolio of the Investment Company
Issuer: the originator, maker, obligor, or creator of the security
Investors of the Fund: shareholders or unitholders of the Investment Company who executed a subscription agreement with the Investment Company or the Fund Manager

Types of Investment Companies

Bond Funds: provide capital preservation while maintaining a conservative stance in terms of asset allocation
Money Market Funds: conservative, with a full basket of fixed-income securities and a term of investments of one year or less
Equity Funds: invest primarily in shares of stock issued by Philippine corporations, aiming for a more aggressive rate of growth
Balanced Funds: invest in both shares of stocks and bonds, balancing growth potential with secure fixed-income instruments

Advantages of Investing in a Mutual Fund

Professional Management: full-time professional managers analyze investment products and select those that would give the best possible returns
Low Capital Requirement: minimum investment amounts are lower compared to direct investments
Convenience: mutual funds can be purchased directly or through a broker, financial planner, bank, or insurance agent, with various services offered such as account statements and phone/computer access to fund information

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

This quiz covers the classifications and functions of investment companies, as well as their products and services. It is a part of the Banking and Financial Institutions course.