Applications of the legislative and regulatory framework (Trusts (Trust…
Applications of the legislative and regulatory framework
Relationship between two parties, in which legal owner or trustee owns property whilst beneficiary receives all benefits from that property.
divides legal and beneficial ownership
specifies purposes of trust fund and how it is to be administered
Trustees then appointed to carry out these provisions
role in context of investment funds
means of segregating assets for protection of beneficiaries, e.g. pension scheme from sponsoring company.
mechanism for collective representation and protection of members of a group of people linked by common interest
high-level framework within which managerial decisions are made in a company.
responsibility of board of directors
aim is to manage company to best meet appropriate requirements of stakeholders.
management should act primarily in best interest of shareholders
Corporate social responsibility (CSR)
Set of guidelines that requires company to consider and report on the impact of its activities on society, economy and environment.
Aims to protect company stakeholders who have no say on its governance
Socially responsible investment (SRI)
Set of guidelines that require investment decisions to have regard to social, ethical and environmental performance of companies, not just financial performance.
share issue is conducted in orderly and fair way
conduct of company remains consistent with listing of shares after issue
Five main concerns
production of information on issue of shares
process by which shares are offered
continuing production and dissemination of information on timely basis by listed companies
continuing conduct of marker in listed securities
rules to ensure listed companies continue to behave in manner that doesn't conflict with its other objectives
Competition and monopolies regulation
protection of interests of customers and suppliers
encourage competition and prevent mergers that would reduce competition through market power.
definition of the product
manager engaged to invest in single asset class, in which they specialise
often on an active management basis.
manager engaged to invest across a range of asset classes
usually within certain restrictions that specify extent to which manager is allowed to depart from benchmark strategic asset allocation
prohibited asset classes
limitations of use of asset (classes) e.g. speculative use of derivatives
max permissible holding of asset (class)
min permissible holding of asset (class)
prohibition of "self-investment" in sponsor's own securities
ethical or social limitations
currency matching A and L
hold specific assets to match liabs
hold specific assets
prohibition of certain assets
admissibility requirements for solvency purposes