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ADMS 4501 (65)
Lois King (41)
Lecture 4

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York University
Administrative Studies
ADMS 4501
Lois King

CHAPTER 17 THE ASSET MANAGEMENT INDUSTRY: STRUCTURE AND EVOLUTION: - Private management and advisory firms : Investment firms: clients pay fees for uniquely/ customised investment advice Each person’s money is invested into unique accounts Investment strategy: guided by firm’s overall investment strategy. Two types : a. Asset management : institutional investors b. Wealth management :high network individuals - Investment ( fund ) companies : general solution Each person’s money is pooled in to invest in a fund ( portfolio of securities) Two types: a. Closed end :public companies , traded on the exchange at a discount ( due to liquidity) b. Open end ( mutual funds) shares issued at NAV Front load funds: commissions are taken off in the beginning when you buy the fund. low load funds/ deferred sales charges : the commissions are taken off when the funds are sold. Problem 2: Load fund : 8% fee, earns 15% Charge: 1000 x 8% = 80 Net fund invested : 920 Your fund at the end = 920 x 1.15 = 1058 HPR = 1058/ 1000 = 1.058 HPY = 5.8% No load fund : 1% redemption, earns 12% Your fund at the end = 1000 x 1.12 = 1120 Charge: 1120 x 1% = 11.2 Your total at the end = 1108.8 HPR = 1108/1000 = 1.108 HPY = 10.88% INVESTMENT COMPANIES - Fund management fees :Fees range from 0.25 to 1% with fees declining over time in comparisons to ETF - Classes of funds : Equity, bond, balanced, money market, flexible portfolio ( hybrid) funds. - Classification: means of distribution , objective - Global investments (funds invested in foreign securities, including Canadian securities) Alternative investing
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