The document discusses the origin and concepts of generic funds. It explains that managing investment portfolios involves managing risks from the instruments themselves and from the market. Diversification and allocation are used to address these risks. Pooled funds are a good idea since individual good investments are expensive. Fund selection involves analyzing balance sheets, management, commercial strategies, and industries. The key concepts for undertaking collective investments are the investment policy, investment strategy, and tactical allocations as outlined in the prospectus. The policy determines the expected volatility and return. The strategy details how objectives will be reached given the policy. Tactical allocations make adjustments based on economic, financial, market, and trend analyses. The functions of the promotor

1. The origin of
generic funds

2. INVESCO Benelux 2
The origin of the funds
• The management of a portfolio means managing of a
risk inherent to the instrument and the risk inherent to
the market.
• The answer to the first challenge is diversificationdiversification
• The answer to the second challenge is allocationallocation

3. INVESCO Benelux 3
• A good investment is expensive, therefore pooling of
funds is a great idea
• Fund selection would comprehend
– Balance sheet analysis
– Knowledge about management
– Understanding of the commercial strategy
– Industry / sector knowledge ,...
The origin of the funds

4. INVESCO Benelux 4
Key concepts
UNDERTAKING OF COLLECTIVE INVESTMENTS (UCIT)
•The investment policy
•The investment strategy
•Tactical allocations
(Prospectus & compliance)

5. Policy means:
• The key decision as to the volatility of the investment
and the expected return
• The most important decision in function of the profile of
the customer
• Capital preservation, capital appreciations, dividend
stream,...

6. Strategy means:
• Determining the optimal way to reach objectives with a
given policy
• The basis for a floor and ceiling for the tactical changes
• cash, bonds, shares, other investments, foreigncash, bonds, shares, other investments, foreign
currencies, mature versus emerging markets,currencies, mature versus emerging markets,

7. Tactical allocations means:
• The adjustments to the percentages of investments will
depend upon:
– The economic indicators
– The financial analysis
– The market analysis
– The trend analysis
– Mass psychology
– All sort of reasons

8. Promotor
Management
company
-Initiator of the investment
(idea, concept, and so on..)
-Market analysis
-Selection of investment
consultants, investment
managers, brokers, lawyers,
auditors, depository bank,
transfer agent, distributor,
custodian)
-Board
-Management contract with
the UCI
-Invests in fonction of the
investment policy as
discribed in the prospectus
-Manages on a daily basis
the investement portfolio
-Shares
-Bonds
-Commercial paper
-Term deposits
-Derivatives
-Other UCITs
-Real Estate
-Securities …
Functions and responsibilities

9. Domiciling
Agent
Accounting
Agent
-Publication and
« control » of the
prospectus
-Notification of likely
amendements to the
rules of incorporation
-Advertising
documents for the
customers
-Calling of board and
shareholders meetings
-Financial reporting
to the shareholders
-Payment of expenses
and taxes in relation
to the domiciliation of
the UCI
-UCI’s accounting
-UCI’s evaluation
at latest quotation
-Daily Net
Inventory Value
computation
-Report and
accounts as well as
profit and loss
statements
Custody
Agent
-Compulsorily a bank
incorporated under
Luxembourg law
autorised to exercise
that type of actvity
-Responsibility to
know how and where
funds are invested in
line with going rules
-Accounting for
transactions,
commissions,
brockerage, and so on
-Executing payments
-Providing a
surveillance of the
activity of the fund
The different functions
Registration
Agent
-Registration of
purchases of
shares,
repurchasing and
transfers

10. -Execution of orders of
shareholders (purchases,
repurchase, transfers)
-Responsible for the UCI’s
account to identify the
purchaser of shares
-Accounting of orders
-Accounitng of transactional
cost and commissions
-For nominative shares the
inscription in the registry, for
bearer shares, payment
instructions
Transfer
Agent
D I S T R I B U TORS
SURVEILLANCE
External
audit
Authorities
I N V E S T ORS
Tasks and functions

11. INVESCO Benelux 11
The pro’s and con’s of funds
• Advantages
– Professional
management
– Spreading costs
– Spreading assets
– Success breads
followers
– Technology
– Authority's supervision
• Disadvantages
– Cost, commissions
– Management might
not respect the
strategy
– Weak performance
– Too aggressive
management
– Liquidation of the fund

12. INVESCO Benelux 12
The classification of funds
• According to the investment policy
• In line with the distribution policy
• In line with customer profiling
• Based on the Net Inventory Value (NIV)
• Major families of funds
– Share funds
– Bond funds
– Mixed funds
– Hedge funds
– Dedicated funds (EIF)
– Funds of funds

13. 13
Three steps in market research
(1)
Customer profiling
(2)
Product profiling
(3)
A perfect match
at the right price
Consumer analysis – Investment products

14. MIFIDMIFID
• Adequacy
Suitability Appropriateness
Services Advise Customer’s
request
Products All products Complex
products
Customers Esp. Retail Retail

15. MIFIDMIFID
• Adequacy
Suitability Appropriateness
Investment
objective
Conform
customers
objectives
Knowledge
Experience
All products All products
Financial
capacity
Professional
and retail
Professional
and retail

16. 16
ABNAMRO

17. 17
(1) Customer profiling
• How much time do you want to spend on your
investments?
• How much have you put aside for unforeseen
events?
• What asset loss would be acceptable?
• Do you have a well defined goal for your
investments?
• What would be your preferred risk/return ratio?
Consumer analysis – Investment products

18. 18
(1) Customer profiling
• What do you intend to do with the capital
appreciation?
• Over how many years do you plan to constitute a
capital appreciation?
• What do you think about investments in risk prone
assets such as shares and funds?
• What return would you find appropriate?
• How would you react if you would loose about
10% of your investment?
Consumer analysis – Investment products

19. 19
(1) Customer profilingConsumer analysis – Investment products

20. 20
Three steps in market research
(1)
Customer profiling
(2)
Product profiling
(3)
A perfect match
at the right price
Consumer analysis – Investment products

21. 21
(2) Product profilingConsumer analysis – Investment products

22. 22
(2) Product profilingConsumer analysis – Investment products

23. 23

24. contact@rogerclaessens.be
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