Pooled Funds

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 a pooled fund. 
  • Identify the purpose for which a pooled fund may be used.
  • Identify that pooled funds require a securities license for an individual to act in furtherance of a trade.
  • Identify that pooled funds must be approved by the securities administrator of the province/territory in which they are traded. 
  • Identify that pooled funds are typically structured as a trust.
  • Identify that pooled funds are offered via offering memorandum, through private placement.

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 a pooled fund.
  • Identify the purpose for which a pooled fund may be used.
  • Identify that pooled funds require a securities license for an individual to act in furtherance of a trade.
  • Identify that pooled funds must be approved by the securities administrator of the province/territory in which they are traded.
  • Identify that pooled funds are typically structured as a trust.
  • Identify that pooled funds are offered via offering memorandum, through private placement.
Additional Knowledge Expected of CFP Professionals
  • Determine how each of these factors may impact the suitability of a pooled fund:
    • 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 a pooled fund.
  • Explain for whom a pooled fund may be suitable.
  • Explain types of sales charges that may be charged on a pooled fund, such as:
    • No-load
    • Low-load
    • Front-end
    • Back-end or deferred sales charge
  • Explain fees associated with pooled funds, such as:
    • Trailer fee
    • Management fee
    • Management expense ratio
    • Trading expense ratio
    • Early redemption fee
    • Switching fees
  • Define the Net Asset Value (NAV) for a pooled fund.
  • Explain how a pooled fund is priced using the Net Asset Value (NAV).
  • Interpret the Net Asset Value (NAV) for a pooled fund.
  • Explain types of income that may be distributed by a pooled fund, such as:
    • Interest
    • Dividends
    • Capital gains
  • Explain the preservation of character that exists when income received by a pooled fund is distributed to unitholders of the pooled fund. 
  • Explain the impact of a distribution from a pooled fund on the net asset value (NAV).
  • Explain the impact of reinvested distributions from a pooled fund on adjusted cost basis.
  • Interpret the return for a pooled fund. 
  • Explain the tax impact (based on asset location) of a pooled fund.
    • When distributions are received due to trading activity in the pool of investments
    • Upon disposition of the pooled fund 
  • Explain that the return of a pooled fund may be presented gross of fees before expenses have been deducted.
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