Major Assignment

Running Head : Managed Funds

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Date :Managed funds

Question 1

A unit trust may be defined as a financial vehicle through which people invest their money . It is aimed at assisting investors to achieve better deals for their investments by pooling the savings of individuals , groups as well as institutions (Sampson , 2000 . It serves as a safe and excellent way for wealth accumulation for the investors The fund managers of unit trusts invest the pooled savings in proper securities ensuring that the investors

enjoy maximum security of their savings . In this case , unit trust provide a better way of investing as opposed to investing in direct company shares because the managers of the unit trusts invest in the best company shares on offer on behalf of the investors . Each investor in a unit trust receives what are referred to as units depending on the size and the value of his or her savings

Question 2

A cash management trust invests in securities available in the short term money markets such as government securities , securities guaranteed by banks and other financial institutions and promissory notes offered by blue-chip companies . Its aim is mainly to provide security for investments which allow ready access and earn some short term returns on the incomes . On the other hand , an equity trust can be simply defined as a unit trust which invests the funds placed under its management in shares (Archie , 2002 . A diversified fund is a type of investment which comprises of a variety of securities which an investor can choose from . Diversification minimises the degree of risks in the fund since the activities or failure of one sector does not affect that of the other sectors

Question 3

An asset class refers to a group of securities which posses similar characteristics , are governed by the same rules and regulations and exhibit almost similar behaviours once at the marketplace (Archie 2002 . There are three main groups of asset classes which include equities or stocks , fixed incomes also known as bonds and cash equivalents also referred to as instruments in the money market . In addition to these three , real estate investments and commodities are also at times classified in the asset class . Examples of asset classes thus include various types of investments such as stocks , cash , real estates and bonds

Question 4

Perpetual analysis from the Perpetual Investment Management Limited (PIML ) in Australia have shown that there has been major revolutions in the among the asset classes for the last 20 years with about occasions among which the last year 's worst performer becomes the following year 's best performer . The average returns for the various asset classes in the Australian stock market are as follows : Shares 11 , Property 9 Bonds 8 and Cash 10

Question 5

Various asset classes have performed differently over the last 20 years . It is not very easy to tell the overall worst and the best since they keep improving and fluctuating in terms of their...