What are the 9 key steps in assessing and developing new investment products?
- Identifying potential market opportunities
- Determining the required PM skills and if external investment management skills will be needed
- Assessing the market
- Determining the legal and regulatory restrictions
- Developing a marketing and distribution strategy
- Preparing a financial forecast
- Obtaining approval from the investment management firm’s new product development
- Developing project management timelines
- Launching the project
When does a product “pull” occur?
- when a new investment product idea originates from within the investment fund or product market
- investment management firm is being “pulled” toward a potential new investment fund or product opportunity
When does a product “push” occur?
- when a new investment fund or product concept originates from a firm’s PM area
- the new investment fund concept originates in the capital markets and is “pushed” through the firm to potentially become a new investment product
Portfolio management stuff promote a new investment fund or product concept for one or both of the following reasons:
- identifying an internal PM skills that appears to be competitive, performance-wise, in relation to what is already in the market place
- identifying an emerging or under developed capital market sector or sub-sector that could form the basis for a new specialized investment mandate
A properly structured new product development committee can bring a number of potential benefits to a firm’s new investment product development process:
- structured process leads to better decision making
- can lead to a more efficient and effective new product development process
- gets new investment funds or products to market quicker
- creates a repeatable process or model that be refined over time
Describe back testing
- involves the retrospective analysis of a potential investment product
- “if you had been given this fund mandate three years ago, how would you have managed it and what would your results have been?”
What are the potential benefits of being first to market with a new product idea?
- an increase in AUM
- market share leadership
- innovator status
The time to obtain approval for the prospectus from the various provincial securities regulators is usually between 4-8 weeks after filing date. This timing is dependent on what three major factors?
- Time of the year
- A “clean” prospectus
- Exemptions
What are the three key inputs for a proforma financial projection?
- AUM (revenue)
- Fees charged to investors (revenue)
- All fees and expenses to be charged to the fund and to the investors
What are three benefits of having a well-defined investment policy for each investment fund?
- Improves portfolio return consistency
- Higher fund sales and AUM
- Reduces potential litigation
What are the two primary types of issuer based guidelines?
- one type restricts the number of issuers that a fund can hold at any time
- the other specifies the maximum percentage of a fund’s NAV that can be invested in any one issuer
What is the short selling restriction for Canadian MFs?
Short selling is limited to 20% of a fund’s NAV
