Table of Contents

Preface ix

About the author xi

1 INTRODUCTION 1

1.1 Collective investment 3

1.2 History 6

1.3 Construction and authorisation 10

1.4 Growth and development 15

2 THE MANAGEMENT OF FUNDS 25

2.1 Who runs mutual funds? 26

2.2 What’s in a name? 28

2.3 Benefits of mutual funds 30

2.4 Uses of mutual funds 35

2.5 Range of investment aims 40

2.6 Performance statistics 41

3 REGULATION 45

3.1 Background and purpose 46

3.2 The process of authorisation 62

3.3 Fund management 64

3.4 Marketing 70

3.5 Administration 72

3.6 Investor protection 74

4 CONSTITUTION AND CONSTRAINTS 79

4.1 Establishment, set-up and changes 80

4.2 Scheme documents 85

4.3 Launch procedures and practices 88

4.4 Running the fund 89

4.5 Charges 92

4.6 Termination/winding-up 95

5 FUND MANAGEMENT 99

5.1 Investment policies and objectives 100

5.2 Investment restrictions 101

5.3 Borrowing and gearing 106

5.4 Underwriting 106

5.5 Stocklending 107

6 MARKETING 109

6.1 Authorisation 110

6.2 Cross-border/international marketing 110

6.3 Distribution channels 112

7 ADMINISTRATION 119

7.1 Investment portfolio 120

7.2 Valuation, pricing and dealing 127

7.3 Investors/participants 131

7.4 Communicating with investors 137

8 TAXATION 143

8.1 Introduction 144

8.2 The fund 146

8.3 The investor/participant 150

Glossary of industry terms 153

Useful contacts 161

Index 165

About the Author

Ray Russell FCMA, FCIS, MSI, CertPFS, AcoI is the Principal of GCR Management Services, a consultancy providing assistance to investment businesses.
He has 10 years’ experience as a Compliance & Business Development Director and has spent more than 20 years in senior positions with prominent British and American investment banks. He has served as a consultant to the Securities and Investment Institute, and on the Investment Management Association’s Executive, Regulations, Audit and Training Committees.