22 - Exchange Listed Managed

Question 0

What type of closed-end funds have the flexibility to buy back outstanding shares periodically?

Answer 0

Interval funds

Or closed-end discretionary funds

Question 1

How do you buy or sell a closed-end fund?

Answer 1

On an exchange at a discount (or premium) to the NAVPS, base on market supply/demand.

Question 2

What are some advantages of closed-end funds?

Answer 2

1. Short selling
2. More fully invested (less need for liquidity to pay for redemptions)
3. Easier to calculated adjusted cost base
4. Lower MERs

Question 3

What are disadvantages of closed-end funds?

Answer 3

1. Do not necessarily trade at net asset value
2. Not widely traded in Canada
3. Commission paid for buy/sell
4. No dividend reinvestment
5. If on foreign exchange, dividends not eligible for dividend tax credit

Question 4

What are three categories of income trusts?

Answer 4

REIT
Royalty or Resource trusts
Business Income trusts

Question 5

In what 5 ways do ETFs differ from Index Mutual Funds?

Answer 5

1. Trade on exchange
2. Commissions to buy/sell
3. Can be short sold
4. Easy to trade
5. Price close to NAV at all times

Question 6

What is a leveraged ETF?

Answer 6

ETF that uses borrowed capital to multiply the returns (e.g. Double the gains of an index)

Question 7

What is an inverse leveraged ETF?

Answer 7

Uses leverage, derivatives and short selling to profit when an index falls, and take loses when it rises.

Question 8

What are the two ways that a Commodity ETF can be structured?

Answer 8

1. Can have physical holding of a commodity (eg Gold)

2. Or can hold derivatives (e.g forward contracts)

Question 9

What are seven ways that private equity finances firms?

Answer 9

1. Leveraged buyout
2. Growth capital
3. Turnaround
4. Early stage
5. Late stage
6. Distressed debt
7. Infrastructure

Question 10

What are two advantages of Listed Private Equity?

Answer 10

1. Access to legitimate inside info

2. Influence over mgmt and flexibility of implementation

Question 11

What are two disadvantages of listed private equity?

Answer 11

1. Illiquid investments

2. Dependence on key personnel

Question 12

How is the adjusted cost base of an investment in an income trust affected by a distribution that includes return of capital?

Answer 12

ACB is Reduced