open-ended investment companies

What is the main difference between unit trusts and open-ended investment companies (OEICs)?

• Unit trusts have fixed prices per unit, while OEICs have fluctuating prices based on the fund's assets.

• Unit trusts are only available in the United Kingdom, while OEICs are global investments.

• Unit trusts are established under a trust deed, while OEICs are structured as investment funds.

• Unit trusts are regulated by the Securities Commission Malaysia, while OEICs are regulated by the Financial Conduct Authority in the UK.

What is the role of a trustee in a unit trust?

• To set the bid and offer prices for units.

• To market and distribute the fund to investors.

• To ensure compliance with the trust deed and prospectus.

• To manage the assets of the fund for profit.

What is the purpose of the bid-offer spread in unit trusts?

• To indicate the risk profile of the fund.

• To show the difference between the buying and selling price of units.

• To determine the total expense ratio of the fund.

• To calculate the annual management charge.

Which regulatory body is responsible for authorizing unit trust funds in Malaysia?

• Bank Negara Malaysia

• Securities Commission Malaysia

• Financial Conduct Authority

• Malaysian Investment Development Authority

What is the main advantage of investing in OEICs?

• Diversified portfolios

• High exit charges

• High annual fees

• Low liquidity

What is the main difference in pricing between unit trusts and OEICs?

• Unit trusts have a single price based on net asset value, while OEICs have bid and offer prices.

• Unit trusts have fluctuating prices, while OEICs have fixed prices.

• Unit trusts have lower fees than OEICs due to their complex structure.

• Unit trusts have front end loads, while OEICs have exit charges.

What is the purpose of the annual management charge (AMC) in OEICs?

• To set the exit charges for investors

• To determine the bid price of units

• To calculate the total expense ratio

• To cover the fund manager's services

Why are OEICs considered useful for investors who do not actively manage their investments?

• They provide professional money management

• They offer low liquidity

• They require a short-term investment horizon

• They have high exit charges

What is the eligibility requirement for a management company to establish a unit trust fund in Malaysia?

• Must maintain a minimum of 30% Bumiputera equity

• Must appoint at least 2 independent directors

• Must have a minimum shareholders' fund of RM10 million

• Must have more than 50% foreign equity

What should investors be cautious about when considering unauthorized funds?

• The lack of regulation and safeguards

• The low risk associated with the fund

• The diversification of the fund

• The high liquidity of the fund