Collective Investment Schemes Research Articles

Suitability of risk assessment tools used during the portfolio recommendation process

Orientation: Investors are overwhelmed with Collective Investment Schemes (CIS) portfolio options.Research purpose: The study set out to assess the emerging themes considered essential and prevalent in establishing a risk profile, establishing a framework for risk assessment tools, and evaluating existing risk assessment tools used in the industry.Motivation for the study: In 2020, newly amended legislation confirmed the importance of a risk assessment. This legislation made it mandatory and compulsory for financial planners to conduct a risk profile analysis concerning investment products in South Africa. Consequently, CIS have implemented various risk assessment tools to establish the investor risk profile.Research approach/design and method: Documentary research methodology was employed, where secondary data were analysed qualitatively. Twelve risk assessment tools were collected, and the established framework was used to evaluate existing risk assessment tools.Main findings: A sound theoretical framework for risk assessment tools, which is comprehensive in nature and include demographic factors, risk categorisation, and regulatory factors, was established. The results indicate that current tools used in the industry are inconsistent and do not address all the factors required to establish an investor risk profile.Practical/managerial implications: The study is significant in that it guides the financial services industry into the elements of assessment in establishing an investor risk profile.Contribution/value-add: A risk profile analysis is compulsory for financial planning. Financial planners and policymakers can consider the established framework to implement a standardised, comprehensive, holistic, risk assessment tool.

Third Country Relations and the Equivalence Regime: Treatment of Collective Investment Schemes

Third Country Relations and the Equivalence Regime: Treatment of Collective Investment Schemes

Comparative Study of Stock, Mutual Fund, and Cryptocurrency Investments

Within the realm of investment, investors are presented with a multitude of options in terms of investment vehicles. Three options that are experiencing growing popularity include equities, collective investment schemes, and digital currencies. The literature search was conducted across multiple databases, including PubMed, Web of Sciences, EMBASE, Cochrane Libraries, and Google Scholar, to explore the comparative aspects of stock investments, mutual funds, and cryptocurrencies. Stocks are a type of investment that symbolize ownership in a corporation, offering the possibility of long-term earnings through the firm's expansion and delivery of dividends. Stocks exhibit diverse levels of risk contingent upon the specific firm and industry and are typically more suitable for investors with long-term objectives. Mutual funds are financial instruments that aggregate capital from multiple investors and allocate it into a diversified collection of investments. This service offers automated diversification and is ideal for investors seeking to entrust the management of their portfolio to professionals. Mutual funds are appropriate for both short-term and long-term objectives. Cryptocurrencies are virtual assets that are bought and sold on cryptocurrency exchanges. Cryptocurrencies exhibit a high degree of speculation and volatility, characterized by swift and unpredictable price movements. Investing in cryptocurrencies necessitates a comprehensive comprehension of technical aspects and entails substantial risks, typically regarded as a short-term or speculative investment.

Tax treatment of collective investment scheme portfolios in South Africa: Assessing implications and alternative solutions

The Collective Investment Scheme (CIS) industry plays a significant role in South Africa's savings and economic landscape, with substantial growth and assets under management in recent years. However, the tax treatment of CIS portfolios has become a subject of concern, as incorrect approaches could lead to substantial revenue losses for the fiscus. This study examines the proposed amendment to section 25BA put forward in the 2018 Draft Taxation Laws Amendment Bill, which aims to introduce a new tax treatment for the proceeds of sales of financial instruments held by CIS portfolios for less than 12 months. Through a comprehensive analysis of the proposed amendment, this study explores the potential implications and challenges that may arise if the amendment is implemented. It also investigates the common law principles in South African case law regarding capital and revenue determination and assesses their applicability to CIS managers and portfolios. By doing so, the study highlights the need for clarity and consistency in tax methodology to ensure fair treatment within the CIS industry. In response to the identified issues, the study proposes alternative solutions that align with existing legislative frameworks and uphold precedents set by case law. These alternative solutions aim to promote tax compliance, transparency, and efficiency within the CIS industry, while avoiding the potential drawbacks associated with the proposed amendment. The findings of this study contribute to the ongoing discourse surrounding tax and provide valuable insights for policymakers, regulators, and stakeholders within the CIS industry. By critically examining the Proposed Amendment, analysing its implications, and offering alternative solutions, this research contributes to a better understanding of the complexities surrounding tax treatment in the CIS industry and facilitates informed decision-making.

Ponzi scheme like investment schemes in India – causes, impact and solution

PurposeNews items like “A whopping 2 lakh gullible investors were cheated…….” amply illustrate the extent of problems and hardships caused by financial frauds related to Ponzi schemes, collective investment schemes (CIS), unregulated deposit schemes, etc. In India, over the years, many Ponzi and unregulated investment schemes have taken place, causing huge economic and financial loss to Indian economy. This paper aims to examine why investment such schemes like Ponzi schemes and CIS become popular, how such schemes got operated in different periods and what could be done to safeguard the interests of investors.Design/methodology/approachThe analysis is done based on secondary data and research work of various researchers, organisation and institutions, which are available in the public domain.FindingsThis paper has tried to analyse various characteristics of such fraudulent schemes, like their modus operandi, promotional activity, background of promoters and legal process involved in recouping financial loss of millions of investors. This paper also examines the demand-side factors that are responsible for popularity of those schemes in India. Noting the regulatory changes and other initiative taken by regulatory authorities to control the supply of unregulated investment schemes, this paper indicates potential actions, which could be undertaken to make people aware about the risks and issues related with such fraudulent schemes.Originality/valueThis paper gives an overview about various aspects of unregulated investment schemes, which have duped numerous people at different point of time. To the best of the authors’ knowledge, this research work is original and has not been published in any other journal.

Regulatory Framework Of The Capital Market In Uganda: An Overview

Capital markets are platforms where investors trade in long-term financial products known as securities. The products include equity (shares), debt (government and corporate bonds), derivatives of these products and units in collective investment schemes. The capital markets are an important component of a modern economy because they facilitate access to long-term patient capital which may not be accessible from traditional sources such as commercial banks. There have been concerns about low investor participation in the capital market over time at the Uganda Exchange. Even though the Foreign Direct Investment portfolio has shown increased growth to about USD 1.1 billion in the first quarter of 2023 this has not translated to increased activity in the capital market showing that several investment opportunities were being externally financed. It is well-known that businesses need to attract funding from investors to supplement internally generated resources in other to expand and grow. This study is an overview of the regulatory framework of the capital market in Uganda with the objective of unraveling the inherent constraints in the system to its growth deriving therefrom. The study found that there is a low level of awareness of the securities market among Ugandans and its corporate entities on the one hand and a manifest reluctance of domestic and foreign companies to participate in the capital market on the other as well as a stranglehold of government on financial drivers owing to weak regulatory and policy frameworks. It recommends a legislative overhaul of the framework to entrench governance best practices, strengthen free market operation and a formalized enlightenment regime.

노동조합법상 유니언 숍 제도의 헌법적 검토

노동조합법상 유니언 숍 제도의 헌법적 검토

Legal Aspects of Promoting the Participation of Collective Investment Schemes in Eastern and Southern African Frontier Securities Markets

African Frontier Securities Markets (FSMs) suffer from low capitalization and inadequate liquidity. They are also perceived as risky and volatile and, as such, are not often included in international institutional portfolios. The central argument of this article is that, the capitalization and liquidity of African FSMs could possibly be enhanced by promoting formation, and participation of various styles of successful and vibrant Collective Investment Schemes (CISs)—more especially the open-ended CISs—which could provide a platform for participation of small investors in the domestic securities markets. Open-ended CISs could also increase the supply of securities to securities markets through further issues to the existing investors as well as the general public. Using the qualitative approach, the study assesses the regulatory and institutional framework for Collective Investment Schemes (CISs) so as to establish whether or not the said framework provides adequate incentives for the formation, and participation of various styles of CISs on domestic securities exchanges. The study employs the doctrinal, non-doctrinal and comparative approaches to examining the effectiveness of legal and regulatory rules. The main findings of the study were that: (a) the legal and regulatory framework permits the formation, and participation of various styles of CISs on domestic securities exchanges (b) both domestic and foreign CISs are permitted to participate on domestic securities exchanges (c) the domestic securities regulator has power to conduct continuous investor education (d) the participation of CISs on securities exchanges stimulates growth in liquidity, and accelerates the development of the exchange.

An Alternative Way to Regulate Crypto Exchanges During the 1-Year Transitory Period: Staking Services as Collective Investment Schemes

An Alternative Way to Regulate Crypto Exchanges During the 1-Year Transitory Period: Staking Services as Collective Investment Schemes

Traditional and Digital Limits of Collective Investment Schemes

Traditional and Digital Limits of Collective Investment Schemes

Prevention of greenwashing of collective investment schemes in Switzerland

Prevention of greenwashing of collective investment schemes in Switzerland

Influence of Equity Investments and Financial Performance of Business in Africa. A Critical Literature Review

Purpose:  Investors can be categorized as either institutional or individual. The management is concerned with the formulation of investment decisions. These investments are key to attaining success thus ensuring increased firm valuation. The overall objective of this study was to assess examine influence of equity investments and financial performance of business in Africa.
 Methodology: The paper used a desk study review methodology where relevant empirical literature was reviewed to identify main themes and to extract knowledge gaps.
 Findings: The study concluded that equity investments have a weak link on explaining the profitability of investments business in Africa. The findings also affirmed that equity investments have a positive significant effect on liquidity. The results indicated that an increase in the equity holding within the firm will result in improvements in the current ratio within the firm.
 Unique Contribution to Theory, Policy and Practice: The study recommends that the capital markets authority to rely on the findings of this study when developing benchmark guidelines on the minimum holding on various investment portfolios. This will ensure there are set regulatory requirements that will guide collective investment schemes in the management of their investors funds which can significantly improve the public confidence in the institutions and drive their financial performance.

The Façade of Collective Investment Schemes

The Façade of Collective Investment Schemes

Equity Investments, Bond Investments and Financial Performance of Collective Investment Schemes in Kenya

The collective investment schemes in Kenya have witnessed increased volatility in their earnings, resulting in irregular growth in the industry. This necessitates the need to understand the factors contributing to poor financial returns from collective investment schemes. Hence this study sought to investigate the effect of equity investments and bond investments on Kenyan CIS’s performance. The specific objectives were: To assess the effect of equity investments, bond investments on financial performance of collective investment schemes in Kenya. The study was anchored on: modern portfolio theory and the efficient market hypothesis. The positivism philosophy was applied, with the firms adopting an explanatory research design. The target population was 17 Collective Investment Schemes registered by the Capital Markets Authority and were operational in the period 2010 to 2018.  Secondary data was sought from the Capital Markets Authority Annual reports and from the respective websites of the CIS’. Data was analyzed using descriptive statistics, correlational analysis and panel regression analysis. Hypotheses were tested at a significance level of 0.05. Findings indicate that equity investment, bond investments have an insignificant effect on CIS’ return on assets. Further, equity investments had a positive and significant effect on liquidity whereas bond investments had an insignificant effect on liquidity. The study recommends that CISs actively revise their equity investments and bond investments to stimulate financial returns.

SO MUCH OWED BY SO MANY TO SO FEW: HOW THE FINANCIAL ADVISORY AND INTERMEDIARIES ACT 37 OF 2002 ADDRESSES “CONFLICT OF INTEREST”

Winston Churchill delivered his famous speech entitled “The Few” after the Battle of Britain of 1940. This historical conflict saw 2353 young men from Great Britain and 574 from overseas, pilots and other aircrew fly at least one authorized operational sortie with an eligible unit of the Royal Air Force or Fleet Air Arm during the period 10 July to 31 October 1940. Although conflict on the scale of a world war cannot be equated to conflicts of interest between financial-services providers (FSPs), representatives and clients, the potential damage that can be caused by intermediaries and representatives who act in their own interest can be devastating to that particular client. In addition, it also has wider implications for the financial-services industry. It is consequently up to the FinancialServices Board (FSB) to ensure that conflict of interest between intermediaries and representatives and clients are managed in anacceptable way. As a matter of background: The FSB was established by the Financial Services Board Act (97 of 1990) and has as its main objective the supervision of financial institutions in order to achieve maximum consumer protection. As such, the FSB acts as statutory registrar of a variety of financial institutions. Hattingh and Millard explain that the FSB is currently in control of the Collective Investment Schemes Control Act, the Financial Services Board Act, Financial Institutions (Protection of Funds) Act , Financial Supervision of the Road Accident Fund Act, Friendly Societies Act, Inspection of Financial Institutions Act, Long-term Insurance Act, Pension Funds Act, Short-term Insurance Act, Supervision of the Financial Institutions Rationalisation Act, the Securities Services Act, and the Financial Advisory and Intermediaries Act. The FSB drafted the FAIS Act with the aim of creating a regulatory structure which regulates the way in which intermediary and advisory services in respect of financial products are rendered. Conflict of interests is but one of the issues that arise between intermediaries, advisors, financial-services providers and clients and the purpose of this note is to analyse a number of key issues introduced by Board Notice 58 of 19 April 2010. This note sets out to explain what the position was before the introduction of the new rules on the management of conflict of interest. It then proceeds to discuss the new definitions that now form part of the legislation. In addition, it discusses the detailed provisions pertaining to conflict of interest and explains what a conflict-of-interest management policy entails. Finally, the note evaluates the new regulations and asks whether they have thepotential to eliminate unfair dealings by advisors and intermediaries and thereby enhancing the professionalism of those who work in the financial-services industry.

COLLECTIVE INVESTMENT SCHEMES’ RETURNS AND ONE YEAR COVID-19 EXPERIENCE: THE NIGERIA’S CASE

This study examines the impact and nexus between cases of coronavirus disease (COVID-19) and the returns of seven classes of collective investment schemes (CIS) in Nigeria (bond funds, equity-based funds, fixed income funds, ethical funds, money market funds, mixed funds and real estate funds) within the first 52 weeks of the outbreak of the pandemic in Nigeria, 27th February, 2020 to 26th February, 2021 using Auto-regressive Distributed Lag and Pearson correlation techniques. Empirical findings suggest that COVID-19 cases and returns of collective investment schemes in Nigeria are cointegrated while COVID-19 cases are negatively correlated with the returns from bonds funds, equity based funds and money market funds as against the positive correlation between COVID-19 cases and returns from ethical, fixed income and real estate funds. Furthermore, COVID-19 confirmed cases are negatively related with returns from mixed fund as against the fund’s returns’ positive correlation with COVID-19 fatal and discharged cases. Moreover, except for COVID-19 discharged cases which has significant positive impact on fixed income funds’ returns, none of the other indicators of COVID-19 exerts significant influence on the returns of each of the seven CIS in Nigeria. It can be concluded that COVID-19 cases do not have significant impact on collective investment schemes’ returns in Nigeria. It is recommended that collective investment schemes in Nigeria should be accorded the popularization, incentives, boost, empowerment it deserves by the government and the organized private sector. KEYWORDS: ARDL; COVID-19; Collective Investment Schemes; Returns; Mutual funds. JEL CLASSIFICATION: E44, G11, G14

Zur möglichen Qualifikation von Mietenpools und Alternativen Investmentfonds nach dem AIFMG

In an update of the „Frequently Asked Questions zur Anwendung des Alternative Investmentfonds Manager-Gesetz (AIFMG)“ (FAQs) by the Austrian Financial Market Authority (FMA) regarding the Austrian implementation (AIFMG) of the Alternative Investment Fund Managers Directive (AIFMD) dated 9 October 2020, rental pool constructions were also included as possible alternative investment funds (AIF) pursuant to the AIFMG. However, such AIF qualification needs to be assessed on a case-by-case basis and can only be affirmed in case such rental pool or rental poollike structure fulfills the requirements of a collective investment scheme. Against this background, the present article intends to provide a practical overview of cases in which a rental pool can qualify as AIF and cases in which it cannot.

The Directive on Alternative Investment Funds Managers (AIFMD): An Introduction

This is the introductory chapter to the third edition of the book ' The Alternative Investment Fund Managers Directive', 3rd. ed. 2020, provided with kind permission by the publisher WoltersKluwer. The chapter provides an overview of the legislative history leading to the AIFMD, introduces to the regulatory approach of the AIFMD, discusses latest developments with regard to the AIFMD (including the Cross-Border Fund Distribution Directive and Regulation, Brexit as well as AIFMD II) and ends with a detailed overview of the full book. It argues that the AIFMD's specific regulatory approach to collective investment schemes paired with the European passport explains why almost a decade after its adoption the AIFMD has become the role model for fund legislation worldwide.

Non-alternative Collective Investment Schemes, Connectedness and Systemic Risk

This paper analyses the connectedness among non-alternative collective investment schemes and with their underlying securities markets. The results show that non-alternative collective investment schemes should not be taken as important in terms of propa-gation of shocks and they may play a limited role from a systemic point view, an outcome that may be confirmed by the second main result of the paper. There is not a long run relationship (cointegration) between the connectedness from non-alternative collective schemes with their underlying markets and the financial systemic risk. On the other hand, in the short run, the way that a negative shock in the financial systemic risk causes an increase in the level of connectedness is shown although the opposite cannot be said; a negative shock in the level of connectedness does not cause a rise in the measure of the financial systemic risk.

Collective Investment: Land, Crypto and Coin Schemes: Regulatory ‘Property’

The UK Supreme Court held in Asset Land Plc v. FCA [2016] UKSC 17 that the land-banking scheme required authorization as a collective investment scheme in order to be sold to retail investors. This article critically analyses that decision in light of various approaches to regulating real estate investment trusts (‘REITs’) in the UK, Singapore, and Hong Kong, respectively. It considers the degree to which deference should be given to the views of the regulators, and the ramifications for other areas like initial coin offerings which regulators are increasingly seeing as securities requiring both prospectus disclosure for the token offering and intermediary regulation for its trading. It argues that the regulation of token offerings is both necessary and desirable. Regulation not only helps protect investors from fraudulent token issuers but also helps to fulfil other worthwhile goals, such as providing additional funding for small to medium-sized enterprises and financial inclusion.