Investment Funds (7/50)

Investment funds pool the resources of a large number of investors, with the aim of pursuing a common investment objective.

• True

• False

Pooling of funds brings a number of benefits, including:

• economies of scale

• investing collectively is to access the investing skills of the fund manager

• access to professional investment management

• diversification

is seen in those types of investment funds that are often described as index tracker funds. Index-tracking, or indexation, involves constructing a portfolio in such a way that it will track, or mimic, the performance of a recognized index.

• Passive management

• Active management

Indexation is undertaken on the assumption that securities markets are efficiently priced and can

therefore be consistently outperformed.

• True

• False

seeks to outperform a predetermined benchmark over a specified time period. It does so by employing fundamental and technical analysis to assist in the forecasting of future events, which may be economic or specific to a company, so as to determine the portfolio’s holdings and the timing of purchases and sales of securities.

• Passive management

• Active management

which is picking the shares of companies with present opportunities

to grow significantly in the long term

• growth investing

• value investing

• momentum investing

• contrarian investing

which is picking the shares of companies that are undervalued relative to their

present and future profits or cash flows

• growth investing

• value investing

• momentum investing

• contrarian investing

which is picking the shares whose share price is rising on the basis that this

rise will continue

• growth investing

• value investing

• momentum investing

• contrarian investing

the flip side of momentum investing, which involves picking shares that are

out of favor and may have hidden value

• growth investing

• value investing

• momentum investing

• contrarian investing

Index-trackers and actively managed funds can be combined in what is known as core-satellite

management

• True

• False