《《Week 7 Investment Options_Managed Funds and Analysis of investment in Shares》.ppt

Active Fund Management Styles continued Asset selection and analysis based on Top-down approach Bottom-up approach BAO2441-L7 * Passive Fund Management or Benchmark / Indexed Funds Investment managers seek to replicate rather than attempt to outperform a benchmark or widely publicised index Changing asset values / index or benchmark construction will require assets to be bought or sold by a managed fund BAO2441-L7 * Passive Fund Management or Benchmark / Indexed Funds continued Performance of managed fund is determined by the asset class invested in: If the asset class performs poorly, so does the benchmark / index fund If the asset class performs well, so does the benchmark / index fund BAO2441-L7 * Taxation Issues for Managed Fund Investors Taxation Office position on managed funds: Investors should pay the same tax rate on managed fund investments as they would on direct investments Fund managers provide details of payment sources with investor distributions BAO2441-L7 * Taxation Issues for Managed Fund Investors continued Tax deferred distributions impact on future taxation arising from capital gains / losses How are deferred tax liabilities treated ? Details of taxation implications of managed fund investment included in PDS BAO2441-L7 * Measuring Managed Fund Investment Returns continued Measuring returns from a fund Rp = (MV1 – MV0) + D 100 MV0 Rp = × 100 where R0 = return on fund MV1 = market value (end of evaluation period) MV0 = market value (beginning of  evaluation period) D = any distributions from client’s  portfolio during evaluation period BAO2441-L7 * Measuring Managed Fund Investment Returns continued Risk-adjusted returns SIp = Rp – Rf x 100 σp × 100 Sip = Where SIp = Sharpe index Rp = return on fund or portfolio Rf = risk-free rate of return σp = standard deviation of returns from fund or portfolio BAO2441-L7