Keep up the good work! Without their experience, diligence, and structure, I would have spent more time worrying about what to study and when rather than putting in the hours needed to pass. Dalton knows how to get it done the first time around! I completed the 10 week review for the exam, including a 4 day live review. I successfully passed the CFP exam and I owe my success to Dalton and their incredible team of instructors.
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From the beginning, I greatly appreciated a detailed schedule for staying on track with the material while allowing you the flexibility between deadlines to manage your work and personal life alongside my certification work. Be careful though — free CFA exam materials floating around the internet can be outdated or inaccurate.
A study plan is a must for all CFA candidates to track progress, manage time and target improvements. We have created and shared our free, personalized CFA Study Planner tool which has been used by more than 40, happy candidates.
Try it out! It can quickly get confusing and overly complicated when it comes to choosing the right calculator for your CFA exam preparations. Being charterholders ourselves, we totally get — and shudder at the thought of — the painful process of studying and passing all 3 levels of the exams.
Back then, we wished others have told us what to expect, what to focus on, and just simply how to prepare for each level to maximize our chances of passing. Thankfully, we have collected and summarized all these advice and tips from previous candidates and charterholders here for you:. However, with lots of practice and grasp of concept, it can easily be one of your stronger topics once you get the hang of it. We have compiled the following list of probability distribution tables that you would need to learn how to use for Level 1 and We worked with AdaptPrep and ExamWhiz to create a question online practice test, weighted to the actual exam.
The practice test is free for all readers to take online, and upon completion you will receive a detailed answer and performance report, including a comparison to the rest of the sample that have previously taken the exam. And again, free! A 3-hour, question practice test, weighted approximately to the topic guidance set by the CFA Institute for the Level 3 exams.
Why not trial it for free for a week? This offer is available for all CFA Levels. Considering the CFA program? This is a great introduction to the main topic areas of the CFA Level 1 exam. Each chapter concludes with a sample of multiple-choice questions, complete with answers and explanations. We think it is a solid source of practice, and they are well reviewed so far, so definitely worth checking them out! Level 2 is expected to launch soon in Fund distribution and sales practices F.
Accounting, taxation and valuation norms G. Investor services H. Investment management I. Measuring and evaluating mutual fund performance. The concept and role of mutual funds Concept of mutual funds. A Mutual Fund is a trust that pools the savings of a number of investors who share a common financial goal. The money thus collected is invested by the fund manager in different types of securities depending upon the objective of the scheme.
These could range from shares to debentures to money market instruments. The income earned through these investments and the capital appreciation realized by the scheme are shared by its unit holders in proportion to the number of units owned by them pro rata. While the concept of individuals coming together to invest money collectively is not new, the mutual fund in its present form is a 20th century phenomenon.
The USA, where financial markets and instruments witness the birth and growth, is the place the concept of mutual fund is founded. In fact, mutual funds gained popularity only after the Second World War Globally, there are thousands of schemes with variety of investment objectives.
Today, mutual funds manage more money as compared to banks in USA. Mutual fund is the most suitable investment for the common man as it offers an opportunity to invest in a diversified, professionally managed portfolio at a relatively low cost. Anybody with an investible surplus of a few thousands rupees can become a client of a Mutual Fund Scheme.
Markets for equity shares, bonds and other fixed income instruments, real estate, derivatives and other assets have become mature and information driven. Price changes in these assets are driven not only by economic events happening in the country but also by global events occurring in faraway places.
A common man may not be in position to have the knowledge, skills and time to keep track for these events, understand their implications and act speedily. Individuals also find it difficult to keep track of ownership of his assets, investments and bank transactions etc. A mutual fund has professionally qualified and experienced staff that manages each of these functions on a full time basis.
The large pool of money collected in the fund allows it to hire such staff at a very low cost to each investor. Thus, the mutual fund vehicle exploits economies of scale in all three areas-research, investments and transaction processing.
Household sector in India has been a surplus sector, contributing to the deficit pockets like Government and corporate. In s, even the common man started investing in share markets with the spread of equity cult and boom in the market. In s, with free pricing of new issues which were hither to controlled and offered goods returns and greater volatility of stock markets, investors suffered heavy losses and individual investors withdrew from the market.
There has been a shift towards building a diversified portfolio based on careful research. As mutual funds serve as a link. Fund structures and constituents Mutual funds have a unique structure, which is different from the legal structure, that manufacturing companies and partnerships firms have. The legal structure derives the inter relationship between the constituents of the mutual fund. In India mutual funds are allowed to issue open and the close end schemes under a common legal structure.
SEBI mutual funds Regulations, specifies the structure of the fund constituents. We take a tool at the constituents of the fund in the following sections. Fund Sponsor: Any person who, acting alone or in combination with another body corporate, establishes a mutual fund is a sponsor. Like a promoter of a company, a sponsor gets a mutual fund register with SEBI. He will form a trust and appoint a board of trustees. He will also appoint as Asset Management Company as fund managers.
The sponsor acting through the trustees will appoint a custodian to hold the fund assets. All these appointments are made in accordance with SEBI regulations. Eligibility criteria:. SEBI regulations require that, for the purpose of grant of a certificate of registration, the applicant Sponsor has to fulfill the following criteria, namely. The sponsor should have a sound track record and general reputation of fairness and integrity in all his business transactions.
Be carrying on business in financial services for a period of not less than five years. The net worth is positive in all the immediately preceding five years. The net worth is immediately preceding year is more than the capital contribution of the sponsor in the asset management company. The sponsor has profits after providing for depreciation, interest and tax in three out of the immediately preceding five years, including the fifth year.
The applicant is a fit and a proper person c. In the case of an existing mutual fund, such fund is in the form of a trust and the trust deed has been approved by the Board. The sponsor or nay its directors or the principal officer to be employed by the mutual fund should not have been guilty of fraud or has not been convicted of an offense involving moral turpitude or has not been found guilty of any economic offence.
Appointment of trustees to act as trustees for the mutual fund in accordance with the provisions of the regulations. Appointment of asset Management Company to manage the mutual fund and operate the scheme of such funds in accordance with the provisions of these regulations. Appointment of a custodian in order to keep custody of the securities and carry out the custodian activities as may be authorized by the trustees. Fund as Trusts: A mutual fund in India is constituted in the form of a public trust created under the Indian Trusts Act, The fund sponsor acts as the settler of the trust, contributing to its initial capital and appoints a trustee to hold the assets of the trust for the benefit of the unit holders, who are beneficiaries of the trust.
Under the Indian Trust Act, the Trust or the fund has no independent legal capacity and only the trustees have the legal capacity and therefore all acts, in relation to the trust are taken on its behalf by the trustees. Mutual funds can invite any number of investors as beneficial owners in their investment schemes.
Trustees: The trust may be managed by a Board of trustees a body of individuals or a trust company as corporate body. While the former will be governed by the provisions of the Indian Trusts Act and the latter will be governed by the provisions of the companies act, The trustees do not directly manage the investment portfolio but entrust the task of the asset management company.
SEBI has laid down the conditions to be fulfilled by the individuals being proposed as trustees. SEBI has also set down the rights and obligations of the trustees. AMC acts as the investment manager of the trust. The trustees are empowered terminate the appointment of the AMC and may appoint a new AMC with the prior approval of the Board and unit holders. SEBI describes the issues relevant to the appointment, criteria, and restrictions on business activities and obligations of the AMC.
Directors should be individuals of high moral standing. AMC must always act in the interest of unit holders and report to the trustees with respect to their activities. Custodian and depositories: The custodian is appointed by the board of trustees on behalf of the mutual fund and must fulfill its responsibilities in accordance with its agreement with the mutual fund.
The custodian must register with SEBI and will be independent of the sponsor. He will hold the physical securities while the dematerialized securities will be held by the depository participant. However, fund will be under the overall direction and responsibility of the trustees. Transfer Agents: They are responsible for issuing and redeeming units of the mutual fund and provide services such as preparation of transfer of documents and updating investor records. AMCs usually appoint distributors or brokers.
A broker acts on behalf of several mutual funds simultaneously and may have several sub-brokers under him for distributing units. Distributors may be individuals or may be others like banks, non-banking finance companies and corporate. Besides brokers, for selling mutual funds scheme individuals brokers are also appointed by the mutual funds. Legal and regulatory environment Different institutions operate in mutual fund industry and offer various schemes to investors.
It is important that the interests of small and individual investors in mutual fund schemes are protected. In the following paragraphs, let us have a look at the role of various regulators of the mutual fund industry. Constituted by an act of parliament in , it has emerged as a powerful watchdog in the capital market arena. Besides mutual funds, the other constituent of the industry as well as foreign institutional investors, offshore mutual funds and venture capital funds are also regulated by SEBI.
It is generally understood all market related and investor related activities of these are supervised by SEBI. While any issues concerning the ownership of the AMs by banks fall under the regulatory ambit of the RBI. RBI also acts as a supervisor of money market mutual funds as they are the sole monitoring agency of all entities that operates in money market. AMCs and corporate trustees of mutual funds are registered under companies Act The overall responsibility of formulating regulations relating to companies lies with the DCA.
Stock Exchanges SE Closed end schemes of mutual funds are listed on stock exchanges and such schemes are subject to regulation framed by the SE. Exchange rules and companies act provision decide on trading, clearing, transfer and settlement of the buying and selling of units in the market place. The board of trustees is accountable to the office of public trustee which in turn reports in the Charity Commissioner.
Association of Mutual funds of India AMFI plays the role of an association for the mutual fund industry in our country. It was incorporated in to collectively represent the mutual fund industry. Its principal objectives are. To promote the interest of mutual funds and unit holders II.
To set ethical, commercial and professional standards in industry III. To increase public awareness of mutual funds in the country. A board of directors elected from its members governs AMFI. Recently AMFI has agreed to play a role of self regulatory organization in mutual fund Industry to a limited extent. As pet the package, UTI Act has been.
This has been opertionalised with effect from 1st February In accordance with the act, the undertaking specified in UTI-1 has been transferred and vested in the administrator of the specified undertaking of unit trust of India, who manage 20 assured return schemes mentioned below along with US and special unit scheme with a corpus of over Rs. The AMC has an initial capital of Rs. The four players would have 25 percent stake each in the AMC.
A draft offer document is to be prepared at the time of launching a scheme of a fund. Typically, it pre specifies the investment objectives of the fund, the risk associated, the costs involved in the process and the broad rules for entry in to and exit from the fund and other areas of operation.
In India, this document needs to be registered with the regulator, SEBI before announcing the scheme and before inviting subscriptions. The offer document is revised once in 2 years in short, offer document gives details about the new scheme and invite the public to subscribe.
In case of closed ended fund, the offer document is issued only at the time the scheme is launched whereas the prospectus of an open ended fund is valid for all time, once it is issued at the time of launch. Along with the application form, an abridged version of the offer document, known as key information Memorandum, is distributed to the prospective investors. SEBI regulations prescribed the standard format of the offer document and key information memorandum.
Offer document is the only comprehensive and authentic source of information about the scheme on offer and the fund. It describes the fundamental attributes objectives and terms of the scheme and also the product on offer. It contains all disclosures that the mutual fund has to make. The prospectus also discloses the risk factors which the fund and thereby the investors would face by investing in the scheme.
Risk factors may be standard or scheme specific. Standard risk factors are market driven and common to all schemes. Scheme specific factors are to be carefully evaluated by the investors. In short, offer document is the primary vehicle for the investment decision, a legal document that protects and governs the right of the investor to information before the makes up his mind to invest and a reference document for the investor.
Which of the following is the best measure of a fund performance? NAV related performance over the period B. Risk adjusted performance C. Absolute returns in comparison with bank deposits D. Absolute returns in comparison with risk free returns.
Asset management, custodial, registrar and administrative and selling expenses are not charged to the fund B. Asset management and other recurring expenses are charged to the fund C. Mutual fund can lend securities B. Mutual fund can trade in derivatives C.
Mutual fund can invest in foreign equities D. Mutual fund can lend money to unit holders. Debt Fund B. Index Fund C. Sector specific equity fund. In respect of index funds, the difference between fund performance and the market performance is called:.
Under performance of the fund B. Out performance of the fund C. Tracking error D. Superior returns over market returns. While seeking SEBI approval for new funds, which of the following is required to give a declaration that the new fund is unique in its investment objectives?
Directors of Asset Management Company B. Directors of Sponsor Company C. Registrars D. Close ended funds B. Open ended equity funds C. Open ended debt funds D. Exchange Traded Funds.
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