Introduction to Fund Management

Ray Russell has been a consultant and trainer within the financial services industry since 1988.  Prior to this he spent 25 years in investment banking.  Operating as GCR Management Services he has served as a director of a fund management firm for 10 years and has developed introductory training for the SII and fund management firms in the UK and Ireland.  He also created a week long course for the compliance Institute.

• Preface xiAbout the author xiii1 INTRODUCTION 1Economic background 3‘Money makes the world go round’ 4‘Money doesn’t grow on trees’ 5Risks and rewards 6Considerations 9Markets 10Investment instruments 11‘Neither a borrower nor a lender be’ 122 ROLE OF FUNDS 13Definitions 14Investment businesses 15Types of fund 16Open-ended and closed-ended funds 23Uses of funds 24Associated packaging 25Features and characteristics 25Purpose, providers and players 25Costs, benefits and comparisons 27How to invest 31Sales, marketing and disclosure 31Categories, sectors and statistics 32Investor protection 33‘Be it enacted by the Queen’s most Excellent Majesty . . .’ 33Regulation in practice 42Establishing a fund 47Who wants one and why? 47Options and approaches 48Documents and authorisations 50Launching the fund 513 PORTFOLIO MANAGEMENT 53Strategies, styles, objectives and policies 54Meeting investors’ requirements 56Risks to be managed 57Hedging 59‘Please don’t ask for credit . . .’ 62‘You can’t do that!’ 63Asset allocation versus stock selection 65Choosing the investments 66‘First, pick your markets’ 66Portfolio weightings and profiles 68Income and growth 69Liquidity 70Evaluating alternatives 71Data, ratios and measurements 75Dealing with events 78News and announcements 79New issues and underwriting 81Rights, splits and scrip 83Breaches of regulations 854 PORTFOLIO ADMINISTRATION 87‘Day by day in every way . . .’ 88Buying and selling 88Delivery and settlement 89Registration 89Custody 91Use of nominees 91Stock exchange reporting 93Records and regulations 93Portfolio accounting and controls 94Profits, income and taxation 96Valuation and pricing 985 INVESTOR ADMINISTRATION 103Agents, agreements and delegation 104Investor transactions 105Registration 108Communicating with investors 1096 PERFORMANCE MEASUREMENT 115Sector comparisons – ‘my fund is better than your fund’ 116Yields and returns 119Time- and money-weighted returns 123Indices and benchmarking 127Volatility and risk adjustments 1307 INVESTMENT MATHEMATICS 133The arithmetic of indices 134Standard deviation 137Capital Asset Pricing Model 139Glossary 147List of abbreviations 155Index 157