Investment Trusts

KNOWLEDGE EXPECTED OF: QAFP® Professionals

Highest Knowledge Level: Awareness

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define an investment trust. 
  • Identify the purpose for which an investment trust may be used.
  • Identify that investment trusts require a securities license for an individual to act in furtherance of a trade.
  • Identify that investment trusts must be approved by the securities administrator of the province/territory in which they are traded. 
  • Identify the structure that an investment trust may have.
    • Trust
    • Corporation
  • Identify that investment trusts are offered via prospectus, on a stock exchange.

KNOWLEDGE EXPECTED OF: CFP® Professionals

Highest Knowledge Level: Evaluation

Knowledge Levels and Associated Verbs


Awareness
The state of being aware that something exists / to have familiarity with a particular activity or subject
Understanding
To comprehend the general relationship of particulars / to have an expertise with how something works
Application
Ability to put information to use / to use knowledge for relevant, practical purposes
Evaluation
To judge or conclude by utilizing data / a systematic determination of something’s worth or significance
Define
To state exactly the meaning of
Identify
To be aware of / to recognize and correctly name / to locate an appropriate resource
Explain
To make clear the meaning of / to describe something in more detail or reveal relevant facts or ideas related to it
Determine
To ascertain / to come to a decision, such as by investigation or reasoning
Compare
To note the similarities and differences between two or more things
Estimate
To determine an approximate value for
Calculate
To find the value using mathematics
Convert
To change from one form or purpose to another
Evaluate
To reach a conclusion or make a through careful study
Interpret
To give the meaning of / to construe or understand / to translate orally

Hold cursor over or click on each term to read its definition.

  • Define an investment trust. 
  • Identify the purpose for which an investment trust may be used.
  • Identify that investment trusts require a securities license for an individual to act in furtherance of a trade.
  • Identify that investment trusts must be approved by the securities administrator of the province/territory in which they are traded. 
  • Identify the structure that an investment trust may have.
    • Trust
    • Corporation
  • Identify that investment trusts are offered via prospectus, on a stock exchange.
Additional Knowledge Expected of CFP Professionals
  • Determine how each of these factors may impact the suitability of an investment trust:
    • Time horizon
    • Volatility
    • Risk tolerance
    • Investment objective
    • Financial situation
    • Personal situation
    • Income
    • Liquidity
    • Control
    • Tax impact
    • Investment management process
    • Economic cycle
    • Cost
    • Historical performance
    • Performance expectations
  • Evaluate how each of the factors may impact the suitability of an investment trust.
  • Explain for whom an investment trust may be suitable.
  • Explain fees associated with investment trusts, such as:
    • Management fees
    • Commissions
  • Explain types of investment trusts, such as:
    • Real estate income trusts
    • Business trusts
  • Define the Net Asset Value Per Share (NAVPS) for an investment trust.
  • Interpret the Net Asset Value Per Share (NAVPS) for an investment trust.
  • Explain types of income that may be distributed by an investment trust, such as:
    • Interest
    • Dividends
    • Capital gains
  • Explain how income earned by an investment trust is handled when distributed to unitholders of the investment trust.
    • For Canadian real estate income trusts
    • For non-Canadian real estate income trusts
    • For business trusts
  • Explain the impact of a distribution from an investment trust on the net asset value per share (NAVPS).
  • Explain the impact of reinvested distributions from an investment trust on adjusted cost basis.
  • Interpret the return for an investment trust.
  • Explain the tax impact (based on asset location) of an investment trust.
    • When distributions are received due to trading activity in the pool of investments
    • Upon disposition of the income trust
  • Explain that the return of an investment trust may be presented gross of fees before expenses have been deducted.
Arrow Left previous / Exchange Traded Funds (ETF)
next / Segregated Funds Arrow Right