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Chapter 4: Structured ILPs - Coggle Diagram
Chapter 4: Structured ILPs
Subscription
purchase of ILP units
Redemption
selling of units for cash
Forward pricing
subscription and redemption of units
based on
next valuation day
Expense Ratio
\(Expense = {{Expenses}\over{Daily Avg NAV}}\)
custodial expenses, legal fees,
auditing fees
Does not include
Trading fees
Redemption fees
Initial sales charges
Turnover ratio
number of times dollar of assets
is reinvested in given year
Soft Dollar Commission
Fund manager obtains additional products or services for directing transactions to.certain brokers
Advantages
Professional
M
anagement
A
ccess to Bulky Investments
D
iversification
E
conomies of Scale
Disadvantages
Fees and charges
1%-3% for equity funds
0.5%-1.5% for fixed incomes
Loss of investment control
Opportunity cost
Suitability
High risk tolerance
Risk factors
addressed by code
Funds should not invest in
Concentration Risk
Governance
Required to comply with
FAA
Insurance Act
Code on CIS
Legal structure
Assets legally owned by insurer
Not a trust
Quasi-trust status
Policy owners have priority over
general creditors in event of bankruptcy