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trainee exam - you will pass <3 > Portfolio > Flashcards

Portfolio Flashcards

(58 cards)

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1
Q

What are the rules for GLCE portfolios?

A

Minimum 7 sectors
Minimum 25 holdings
Minimum 9 holdings in core stock list
Between 20%-50% Growth style
Maximum 30% in any sector
Maximum 10% by value in any one stock

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2
Q

Minimum market cap for model -

A

20bn

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3
Q

Minimum market cap for not covered/monitored investment -

A

$20 Billion or £10bn FTSE 100

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4
Q

Minimum investment amount in GLCE -

A

£70K

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5
Q

What is the maximum exposure to an individual equity –

A

10%

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6
Q

What is the maximum equity allocation in a Cautious AIA –

A

40%

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7
Q

Which AIA correlates to a medium NATR?

A

Balanced or Steady Growth

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8
Q

What Split is Cautious for Equity and diversifiers?

A

60-100% diversifiers

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9
Q

Balanced diversifiers?

A

40-60%

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10
Q

Steady growth diversifiers?

A

20-40%

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11
Q

Equity Growth diversifiers?

A

Up to 100% Equity

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12
Q

When is an Investment Manager required to complete a DDQ?

A

When an IM wants to hold a stock that isn’t on the buy list. It will have to have a £20bn market cap if not on our covered list and £10bn if FTSE 100 but not covered.

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13
Q

Name two stocks that meet the Cloud, Data & AI sub theme? –

A
  1. Alphabet
  2. ASML
  3. Microsoft
  4. AJ Gallagher
  5. Experian
  6. MSCI
  7. NVIDIA
  8. RELX
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14
Q

Name three companies that play to the electrification of transport? –

A
  1. Infineon
  2. Schneider Electric
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15
Q

Name the 12 core stocks? AAACCDELMPSU

A
  1. Procter and Gamble
  2. EssilorLuxoticca
  3. Schneider Electric
  4. Canadian Pacific Kansas City
  5. Costco Wholesale
  6. UnitedHealth Group
  7. ASML Holding
  8. Alphabet
  9. Linde
  10. Danaher
  11. Amazon
  12. Microsoft
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16
Q

Name two Killik covered stocks in the Utilities sector –

A
  1. American Waters
  2. E.ON
  3. National Grid
  4. Orstead
  5. NextEra Energy
  6. SSE
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17
Q

Which company on Killik’s equity Buy List creates EUV lithography equipment?

A

ASML - Advanced Semiconductor Materials Lithography

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18
Q

3 growth buckets in which our model portfolio equities fall into?

A

Fast Growth, Cyclical Growth, & Defensive Growth

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19
Q

Economies of scale?

A

When a firm gets larger - costs decrease

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20
Q

FX Charge -

A

0.5% for trades under £30,000 and 0.35% thereafter –> 0.35% flat rate at the end of March

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21
Q

Pricing power

A

The ability to raise prices without affecting demand (monoply in an industry) ASML, LINDE.

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22
Q

Operational Gearing

A

The effect that fixed costs can have on the relationship that exists between sales and your operating profits - good example - https://moneyterms.co.uk/operational_gearing/

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23
Q

What are the Investment Strategies for MIS? N.B segregated services are now called INVESTMENT STRATEGIES

A

All - Alternative allocation , Fixed income, Global Emerging Markets,, Global Large CapEquity, Global Mid Cap Equity , Multi Manager (No new accounts), Sustainable PMS, PMS, Special Situations, IHT Service, Gilt , Alternative IncomeGlobal SustainableGlobal Smaller CompaniesGlobal Technology InnovationGlobal Venture Capital*

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24
Q

Name the 11 Sectors

Study These Flashcards
A
  1. Utilities
  2. Communication
  3. Consumer Discretionary
  4. Consumer Staples
  5. Energy
  6. Real Estate
  7. Technology
  8. Financials
  9. Health Care
  10. Industrials
  11. Materials
25
Name 4 cyclical sectors?
1. Financials 2. Industrials 3. Materials 4. Technology
26
Name 3 defensive sectors?
Utilties, Consumer staples, Health care
27
Name 3 fast growth sectors?
Tech, Consumer discretionary, Communication services
28
How is ESG measured on the research tool?
ESG is sustainalytics (morningstar) - ESG score · The ESG score is a internally derived score based on an assessment on the company’s ESG performance. · The inputs are a number of third party ESG metrics, which are then used to determine a score. · It is a 1-5 scale where 1 is poor ESG metrics and 5 is good ESG metrics. · The ESG score is considered as part of the investment process, which companies with low ESG scores needed to be justified for inclusion on the covered list.
29
What is Systematic risk?
Is the risk inherent to the entire market, attributable to a mix of factors including economic, socio-political, and market-related events. N.B cannot be eliminated by diversification. e.g - inflation, interest rates, war, recessions, currency changes etc
30
What is Systemic risk?
Is the risk that a company or industry level risk could trigger a huge collapse. N.B can be dwindled through diversification.
31
Killik Managed Fees -
1.6% on the first £1m, 1.4% thereafter
32
Killk Advised Fees-
0.95% on the first £1m, 0.8% thereafter
33
How often do you need to complete a portfolio review?
AIS - 1 Annually, MIS - Every 6 Months
34
What is modified duration?
Modified duration is a formula used to express the change in value of a bond from a 1% change in interest rates, illustrating that bond prices and interest rates move in opposite directions- higher interest rates lower bond prices, and lower interest rates raise bond prices.
35
What is Gross Redemption Yield (GRY)?
Annualised return taking into account running yield and capital gain/loss, assume bond held to redemption
36
What is Net Redemption Yield (NRY)?
Annualised return after paying income tax on the coupon taking into account running yield capital gain/loss if bond held to redemption
37
What is Yield to Maturity (YTM)?
(YTM) is the percentage rate of return for a bond assuming that the investor holds the asset until its maturity date, and receives all of its remaining coupon payments and return of the principal (par value) at maturity. A bond's yield to maturity rises or falls depending on its market value and how many payments remain to be made. Same as GRY.
38
What is the income yield?
The annual income on a bond as a percentage of the price
39
Name the three credit rating agencies?
Fitch, Moody's, S&P
40
Name two characteristics that make a bond more susceptible to movements in interest rates?
Long maturities, low coupons
41
What would you expect to happen to the price of a bond if interest rates rise?
Price of the bond will fall (Inverted)
42
What would you expect to happen to a fixed coupon bond when inflation expectations rise?
You would expect the yield to rise.
43
What is a perpetual bond? (also known as Perps or consol bonds)
A bond that doesn’t have a maturity date
44
Would you prefer to have a bond with a rating of BB+, BBB or BBB- ceteris paribus ? N.B Fitch and S&P have the same rating letters.
BBB - as ceteris paribus has been stipulated - see link - https://www.fidelity.com/learning-center/investment-products/fixed-income-bonds/bond-ratings
45
What is the objective of the Fixed Income service?
To provide a reasonable and predictable level of income with less risk of investing in direct equities
46
If Gilt yields rise what would you expect to happen to corporate bond yields?
Yields are rising as prices are falling. I would expect the corporate bond yields to also be rising
47
What type of bond would you buy if you want to protect yourself from inflation?
Index-linked bonds
48
What is a callable bond?
Is when the issuer can redeem the bond before maturity (it is just an option,not obligation)
49
What happens to the coupon of a floating rate bond if interest rates go up?
The coupon will increase
50
30% of Company A’s revenues are recurring, compared to 70% of Company B. Which company should trade at a higher multiple, and why?
Company B – recurring revenues are more attractive to investors, more predictability of revenue streams. You will pay a higher multiple and typically a higher company valuation.
51
Fixed income service YTM
5.90%
52
Fixed income service IY
5.50%
53
What's the difference between YTM and IY?
 IY is the yield received if holding the bond for 1 year. YTM is the internal rate of return of holding a bond from purchase to maturity (including compounding etc)
54
Minimum Investment in FI
£30k
55
Name the different asset classes?
Asset backed securities & specialist lending - Commercial property & infrastructure - Multi Asset - Macro Hedge & Specialist Equity- Commodities - Trend Following
56
Low Volatility hedge v High Volatility hedge:
High outperforms in a bear market whears you would expect a low volatility headge to ouperform in a bull market
57
What is an asset backed security?
is a type of financial investment that is collateralised by an underlying pool of assets—usually ones that generate a cash flow from debt, such as loans, leases, credit card balances, or receivable
58

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