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Exam ICWIM Topic 1 Question 96 Discussion

Actual exam question for CISI's ICWIM exam
Question #: 96
Topic #: 1
Why might a portfolio manager use an equity fund rather than direct equity investment within a portfolio?

Suggested Answer: B Vote an answer

Equity funds allow portfolio managers to efficiently access a specific market or sector that may otherwise require significant resources and expertise to invest in directly. For instance, a fund specializing in renewable energy provides exposure to that sector without the need for individual stock selection.
* Avoiding capital gains tax (A): This is not applicable because funds do not inherently avoid tax obligations.
* Reducing ongoing charges (C): Funds typically have higher fees than directly holding equities.
* Changes in volatility (D): While funds manage diversification, they do not specifically capitalize on volatility.
References:
* International Certificate in Wealth & Investment Management: Section on mutual funds and specialized investment funds.
* Use of funds for sectoral or thematic investment strategies.

by Ryan at Jan 21, 2025, 01:44 AM

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