Principles of Fund Management
Fund management is the management of funds available for investment in order to meet specified investment goals for the benefit of the investors. Investors may be both private individuals in different stages of the life cycle and institutional investors such as pension funds, insurance companies, investment companies and other financial institutions.
A fund manager is responsible for the investment management of the assets of the fund and also carries the responsibility for general fund supervision, ensuring that its investments abides by the pre-agreed investment policy and keeping to pre-set limits as well as monitoring the daily trading activity of the fund and financial markets. Many consider fund manager professionals as investment experts and selecting the right fund manager is an important task, especially when the fund is going to be actively managed. The right fund manager will ultimately determine whether the fund will outperform the market and other similar funds.
There are a number of other important players in a fund management environment. These are the custodian, the administrator, the auditor, the compliance manager and the risk manager. Within this web of different players, regulators ensure that the interests and money of investors is protected.
The objective of this study unit is to give an introduction of all of the major aspects of the funds industry, the main players, regulations and different fund structures. In this unit, students will be able to identify the different fund structures, analyse a fund and its underlying portfolio as well as obtain a knowledge of the main legislation governing fund management. This module will focus exclusively on European Union (EU) legislation.
After completing this unit a student should be able to:
· Outline the EU Directives and Regulations impacting Fund Management in the EU and Malta.-
· Understand the role of the investment manager, as well as other relevant personnel and services providers, in an AIFM
· Explain the different asset classes that require a licence for management, and the different strategies that can be followed
· Understand the economic principles underlying these assets, and the various ways of making these investments
· Understand the underlying portfolio of a fund and be able to provide a high level analysis of the portfolio, its risks and manager style.
· Understand the life cycle of investments, understand the entry points and exit points in relation to different strategies
· Establish the risks that can be encountered through investments, and how these can be quantified
· Distinguish between different pricing strategies and the determinants of pricing of funds and their investments as well as the costs of running and setting-up funds
1. An introduction to fund Management
· Basic definition of fund management
· History of fund management
· Overview of CIs market and main players in the market
· Why do people invest in funds?
· CSFs for funds
· Different types of funds available, retail funds, professional investor funds (PIFs), ETFs, ETCs, Ethical funds, passive vs active funds etc.
· Reaching a client’s savings aims by using Collective Investment Schemes (CIS)
2. The underlying portfolio
· The different underlying of a CIS.
· Fixed Income Market
· Equity Market
· Commodity Market
· Use of funds in life assurance and pension plans
· Distinguish between the different instruments and identify where a fund invests, performing basic portfolio analytics
3. The role of the fund manager and the other players in the mutual fund environment.
· Describe the role of a fund manager and all the other main players in a collective investment scheme environment.
· Describe the relationship between the different players.
· Ability to understand how applications and redemptions are managed by fund manager and what it involves
· Summarize what are the skills and resources used when it comes to manage a fund
4. Describe the process when setting up new collective investment scheme in Malta.
· List the process when setting up and managing a fund
· Knowledge of the different agreements between the parties to a collective investment scheme.
5. Describe the main legislation which effects collective investment schemes in Europe
· Main highlights of UCITS
· Main highlights of AIFMD
· Main highlights of MIFID
This unit will be assessed through one home assignment including an in-class presentation (75%) and a final Time-Constrained Assignment of 1.5 hrs in duration (25%)
Candidates need to pass all components in order to obtain unit ceritification.
Prospective students are expected to have a good level of English and a basic knowledge of the capital markets.