January 27th, 2009
Andy Goldman asked:
One of the most popular Exchange Traded Funds, the NASDAQ 100 Trust, known as the cubes, may be soon having some strong competition. The cubes (QQQQ) have been the default Fund for the tech industry. This may be about to change.
A new exchange traded fund due to be introduced next year is being planned by Archipelago Holdings Inc. This ETF will cover the technology sector; however it is covering the technology sector with a twist. Current technology funds give technology companies weight in the index based on market capitalization. Companies with large market capitalizations such as Microsoft would have a larger influence on the index. For example many technology indexes give Microsoft a 10% or more weight in the index.
Archipeligos’ new index will be price weighted. Companies with the highest price will be given more weight in the index. By this method Microsoft may only have a 1% weight in this new ETF while Genentech would make up 3.3% of the index.
Another difference is this new fund will have a 25% investment in healthcare companies, which are outside the traditional tech sector. The highest priced issue in the index will be Genentech. Genentech will have the greatest weight in this index.
This new fund will be very similar to an existing index. This is the ArcaEx Tech 100 index. Over the past five years the ArchEx Tech 100 index has trounced the performance of the QQQQ. Over this period the QQQQ has shed about 10% a year, while during the same period of time the ArcaEx Tech 100 index has only shed about 2.4% a year. This is primarily due to the smaller cap stocks that make up the index and the fact it includes 25% investment in the healthcare industry. This performance alone is bound to attract a lot of attention and competition for the NASDAQ 100 Trust.
The QQQQ has about $1 Billion invested. If the new fund gets even only 5% of that it will be a billion dollar fund right out of the gate. This new fund is due to be introduced in early 2006, pending approval by the SEC.
Tags: Etf, Healthcare Industry, Qqqq
Posted in Finance | No Comments »
January 21st, 2009
gabe s asked:
I’m 18 years old, and one of my life goals is to set up a charitable trust fund, payable mostly to economic development, UNICEF, and a few others. I only have about $2,000 at the moment, and not sure how to begin right now. I’m planning on entering medicine, so there should be some money in the coffers eventually, but nothing significant for at least the next 10-15 years. Your help is greatly appreciated!
Tags: 18 Years, Charitable Trust Fund, Coffers
Posted in Investing | 2 Comments »
January 20th, 2009
Amy Nutt asked:
In understanding the difference between domestic and offshore mutual funds, it is important to know what these funds are. It is true that there are a number of different mutual funds that are available to investors, but the basic construction of a mutual fund is that it is created by a firm that takes the money of many investors and invests that money into stocks, short-term money markets, bonds, and other types of securities. It is then that the manager of the portfolio manages that money by investing and trading the underlying securities of that fund. What happens is that capital gains or losses are realized and those gains and losses are then passed to each individual investor.
The United States and Canada have mutual funds that operate in a similar manner. These funds are open-end funds, closed-end funds, and unit investment trusts. Those investing in offshore mutual funds may find that the term is used more broadly. It is used to refer to any type of collective investment. The names that the investor may see these referred by include open-ended investment companies, unit trusts, undertakings for collective investments in transferable securities, and unitized insurance funds. That may seem like a lot to swallow, but many investors find that their offshore mutual fund investment opportunities are not as restricted because there are more types of mutual funds to invest in.
The offshore mutual fund
There are tax advantages to the offshore mutual fund that individuals will not find with their domestic mutual funds. Unless one of the rare loopholes is found, United States residents will still be fully taxed on their offshore mutual fund. This is usually referred to as “foreign arising income” on IRS tax forms. Nevertheless, individuals have found that investor-friendly countries allow savings on investments through tax incentives. Some offshore locations, such as the Virgin Islands, do not require tax to be paid. This allows the portion of the gain that would normally go to tax to be reinvested.
There are certain organizations that argue that allowing no tax to be paid or reducing the amount of tax is a form of legalized tax evasion. However, tax incentives are a way for individuals to invest into that economy, making that economy even stronger.
But what one will find is that there is a high degree of regulation when it comes to offshore mutual funds. One may find that there may be a minimum investment of $100,000 and that an individual is required to identify him or herself as a “professional investor.” In the U.S., Canada, and various other countries around the world, a person does not have to be a professional investor to invest in mutual funds. They have brokers who can take care of that for them and guide them through the process or simply take care of 100% of the account transactions.
There may also be instances in which the number of investors is limited because of stipulations set forth in constitutional documents. It is these types of regulations that can limit the number of foreign investors in mutual funds, but they can prove to be quite profitable.
The differences
So as you can see, there are differences between domestic mutual funds and offshore mutual funds. Offshore mutual funds can be a fantastic investment for the investor once the hurdles are cleared. Domestic mutual funds may be easier to invest in, but an individual may find that the return on their investment is not as high. However, many prefer their domestic mutual funds over the confusion that surrounds offshore mutual funds. Nevertheless, many find that the confusion is worth it and that the process becomes easier for them over time.
Tags: Investment Opportunities, Irs Tax Forms, Unit Investment
Posted in Finance | No Comments »
January 16th, 2009
Kevin Von Tungeln asked:
If you’ve researched pet trusts, and are a pet owner who is concerned about the future well being of your animal when you are no longer able to care for him or her, you’ve most likely discovered the necessity for this part of your estate planning. Even after deciding to obtain a pet trust, however, pet owners continue to have questions concerning the legal process and funding of such a trust.
So how much money should you actually leave for your pet through a pet trust? The answer to this question will vary according to two factors: the size of your estate and the amount of money that is necessary to actually take care of your pet. A qualified California pet trust attorney will be able to counsel you regarding the easiest way to translate the sum of your assets into a logical and substantial amount for pet trust funding.
As a pet owner, only you are fully aware of the costs required for the care of your animal. You know the specifics requiring your pet’s needs (and preferences), and you understand the price tag attached to those needs. For example: Does your pet have a medical condition that requires frequent medication or veterinarian visits? Does your pet require a certain brand of food due to food allergies or digestion problems? How much do these things cost you on a yearly basis? After careful consideration of these costs in caring for him or her, and factoring in the life expectancy of your pet, you should have a good idea on the amount of money that will be necessary to adequately fund a pet trust.
There is a limit, however, to a prudent amount needed to fund a California pet trust. In the well-known case of Leona Helmsley, the exorbitant $12 pet trust she left for her Maltese named Trouble was indeed trouble for the courts. After probating her will, the courts determined the amount to be excessive for her pet’s needs, and redistributed the money. Trouble’s pet trust retained $2 million, while the remainder went to charitable animal organizations and to the grandchildren who were purposefully left out of Helmsley’s will.
The amount needed to adequately fund your pet’s trust is an important decision, and should not be one that is undertaken without careful consideration and consultation with a qualified California pet trust attorney. A pet trust lawyer who has years of experience handling pet trusts will be able to guide you in the right direction, ensuring the proper care of your pet during situations in which you are no longer able to care for him or her on your own.
Tags: Digestion Problems, Food Allergies, Remainder
Posted in Law | No Comments »
January 15th, 2009
John Doe asked:
How do you start a Trust Fund and how much does it usually cost? Do different types cost more than others? Does it matter how much money is going into it? Is it cheaper to start multiple Trust Funds at one time than starting multiple Trust Funds individually?
Tags: How Much Money, Trust Fund, Trust Funds
Posted in Personal Finance | 2 Comments »
January 14th, 2009
mohit yadav asked:
Venture Capital Fund –Basic Concepts
Mohit Kumar Yadav
VTH YEAR BA.LLB
NEW LAW COLLEGE,
BHARATI VIDYAPEETH UNIVERSITY,PUNE
Introduction:
Venture capital is a type of private equity capital typically provided by outside investors to new businesses. Generally made as cash in exchange for shares in the investee company, venture capital investments are usually high risk, but offer the potential for above-average returns. A venture capitalist is a person who makes such investments. A venture capital fund is a pooled investment scheme that primarily invests the financial capital of third-party investors in enterprises that are too risky for the standard capital markets or bank loans. Venture capital can also include managerial and technical expertise. Most venture capital comes from a group of wealthy investors, investment banks and other financial institutions that pool such investments or partnerships. This form of raising capital is popular among new companies, or ventures, with limited operating history, who cannot raise funds through a debt issue. The drawback of this form of entrepreneurship is that the investors get a say in the management of the company apart from the equity holding. Laws relating to venture capital funds in India
SEBI (Venture capital funds) Regulations 1996.
The venture capital fund regulations by the Securities and Exchange Board of India are a comprehensive set of laws to be followed by the venture capital funds in India. From the registration of venture capital funds to the action to be taken in case of default, the regulation has been divided in VI chapters.
Registration Of Venture Capital Funds
A Venture capital fund can either be a fund established as a trust under the Indian trust act or a company as defined under companies act 1956.
The regulations provided for the registration of a company or a trust which either was functioning as a venture capital fund before the commencement of this act or proposed to do so after the commencement of this act.
A company or trust (which functioned as a venture capital fund before the commencement of these regulations) shall cease to function as a venture capital fund if it does not apply to SEBI for registration within 3 months from the commencement of the regulations.
Procedure to be followed for registration:
i) An application for grant of certificate to be made to SEBI in Form A along with a fee of Rs 25,000.The fee shall be paid through a draft.
ii) There are certain conditions which must be fulfilled before the certificate of registration is granted by SEBI:
a) In case of a company, the MOA of the company shall have the business of venture capital fund as its main object, and invitation to public shall be expressly barred by the MOA and AOA, in addition to this, any officer of the company shall be involved in any litigation connected to the security market or should not have been convicted of an economic offence.
b) In case of a trust, the trust is in form of a deed and has been duly registered under the Indian registration act. Carrying the business of venture capital fund is its primary objective. Any trustee of the trust is not involved in a litigation connected to security market and has not been convicted of any economic offence.
c) In case of a body corporate, it should be formed under the laws of central or state legislature and it is permitted to venture in the field of venture capital funds.
iii) The application for registration shall be complete in all respect. If SEBI discovers any thing in the application that renders it incomplete, it shall give the applicant a time of thirty days to remove the loophole, failing which the application can be rejected by the board.
iv) SEBI after finding the applicant to be eligible, shall inform the
applicant about it, after receiving the information the applicant shall tender to SEBI the registration fee which is Rs 5 lacs, after receiving which SEBI shall issue the Certificate of registration.
Conditions And Restrictions On Investments
The regulation has applied a lot of condition and restriction to the amount of investment to be made in and by the venture capital fund in India.
An investment in the venture capital fund can be made by any person whether Indian, Foreigner or NRI, but no investment which is less than Rs five lacs can be allowed in the venture capital fund. this however does not apply to investment made by the employees, directors or the principal officers of the company or by the trustee where the venture capital fund is a trust.
The investment strategy at the time of registration shall be disclosed by the venture capital fund. The venture capital fund shall also disclose the duration of its life cycle. Not more than 25% of the fund shall be invested in a single venture capital undertaking .Investment to be made in the following manner:
i) At least 66.67% of the fund to be invested shall be invested in unlisted equity shares or other instruments linked to equity shares of the venture capital undertaking.
ii) Not more than 33.33% of the investible fund shall be invested by the way of IPO of a venture capital undertaking whose shares are proposed to be listed, the debt instrument of the venture capital undertaking in which the venture capital fund has already invested, preferential allotment of equity shares of a listed company, equity shares or equity linked instrument of a financially weak company and SPV’s which have been created by the venture capital fund..
No venture capital fund shall get its units listed on any recognized stock exchange till the expiry of thee years from the date when they were issued to the investors by the venture capital fund. The venture capital funds shall also not invite any member of the public by way of advertisement to subscribe to its units. The venture capital fund may receive investments only through private placements of its units.
Placement Memorandum or Subscription Agreement
Every venture capital fund shall issue a placement memorandum which contains all the terms and conditions relating to the scheme through which money is proposed to be raised from the investors. The venture capital fund may also enter into a subscription agreement with the investors which would specify the terms and conditions of the scheme through which money is proposed to be raised. The venture capital fund shall submit a copy of such placement memorandum or subscription agreement with SEBI along with the report of the money actually raised through such agreement or memorandum.
The placement memorandum or the subscription agreement shall have the following essential:
It shall contain the details of the trustee and the trust as well as the details of the directors and the principal officers of the venture capital fund. It shall also stae the minimum amount of money to be raised to start the venture capital fund and the minimum share to be invested in every scheme of the venture capital funds. Tax implications which would be applied to the investors shall also be stated. The manner of subscription to the units of the fund, the period of maturity of the fund if any and the manner in which the fund would be wound up shall also be stated.
Every venture capital fund shall maintain a book of record for a period of eight years which would generate the true picture of the venture capital fund. SEBI at any time can call for information regarding the working of the venture capital fund, the information shall be submitted to SEBI in the specified time period.
Investigation
SEBI on receiving a complaint from the investors or suo motu appoint one or more person as investigating officer, who would undertake investigation in relation to the maintenance of the account books of the venture capital fund, compliance of the regulation and the affairs of venture capital funds. A notice of at least ten days shall be given before the investigation is carried on though if SEBI deems it to be in interest of the investors it may not serve a notice at all. It shall be the duty of every officer of the venture capital fund to cooperate with the investigation officers, they shall be provided with all the documents, books etc which are in the custody of the officers of the venture capital fund. The investigation officer shall also be furnished with any statement he demands for. After the completion of investigation the investigation officer shall submit his report to SEBI. The board after considering the investigation and giving the venture capital fund to be heard may direct the venture capital fund not to launch new schemes or prohibiting the concerned person from disposing off the property of the venture capital fund or to refund to any investor any amount of money or asset.
Action In Case Of Default
Any venture capital fund that fails to act in accordance with the regulations, or fails to furnish reports of the affairs of the venture capital fund to SEBI or furnishes report that is not true, does not cooperate in any enquiry instituted by SEBI or fails to act on the complaints made by the investors or does not give a satisfactory reply in this regard to SEBI, shall be dealt with in manner provided in SEBI (procedures for holding enquiry by enquiry officers and imposing penalty) regulations, 2002.
Tags: Company Venture Capital, Registration Of A Company, Wealthy Investors
Posted in Corporate | No Comments »
January 12th, 2009
denny j asked:
my son had a trust fund set up by the courts about 6 or 7 years ago, i use to get statements from the courts but have not recieved anything in a few years. how do i get a statement on that?
Posted in Personal Finance | 1 Comment »
January 7th, 2009
Nad asked:
How do I go about to change the trustees of our trust-fund?
Posted in Personal Finance | 1 Comment »
January 4th, 2009
DAVID K asked:
The trust fund was set up by moms uncle for myself when I was born in 1976 and then one was set up for my sister from my amount
Posted in Investing | 1 Comment »
December 27th, 2008
Brian Krassenstein asked:
For those who want to get involved in the stock market, but don`t have sufficient funds to make it worthwhile purchasing just one company`s stock, mutual funds, or unit trusts, can be a good option. Many companies allow the purchasing of these on a monthly basis, thus `drip feeding` the purchases over a period of time.
A mutual fund is a professionally managed type of collective investment scheme that pools money from many investors and invests it on their behalf. The mutual fund will have a fund manager that trades the pooled money on a regular basis. The term mutual funds is used in the United States and Canada. In the UK, Ireland, Australia and some other countries they are known as unit trusts. For our purposes mutual funds and unit trusts have been to mean virtually the same thing, but note there are some differences, which should be checked at the time of any purchase.
Trusts and OEICs provide a mechanism of investing in a broad selection of shares, thus reducing the risks of investing in individual shares. There are thousands of Unit Trusts and hundreds of OEICs to choose from, so it is important to select the right fund to meet your needs.
Unit trusts are open-ended; the fund is equitably divided into units which vary in price in direct proportion to the variation in value of the fund’s net asset value. Each time money is invested new units are created to match the prevailing unit buying price; each time units are redeemed the assets sold match the prevailing unit selling price.
Each Unit Trust has its own investment objective and the fund manager has to invest to achieve this objective. The fund manager will invest the money on behalf of the unit holders (or shareholders). The value of your investment will vary according to the total value of the fund.
The trust manager makes a profit in the difference between the purchase price of the unit or offer price and the sale value of units or the bid price. This difference is known as the bid–offer spread. The bid–offer spread varies from company to company, and even from fund to fund within the same company. Market conditions will often dictate the size of the spread, the lower the spread the better for the investor. Some fees are declared as a percentage of your investment, others are built into the price.
Mutual funds, and unit trusts, can invest in many kinds of securities. The most common are cash instruments, stock, gilts, and bonds, but there are hundreds of sub-categories. Common areas to invest in are stocks in geographical areas, such as North America, Europe, Asia and so on. Or, they can invest in Emerging Markets, New Companies, companies with green credentials, small companies, or the bigger so-called Blue Chip companies etc.
Bond funds can vary according to risk, for example high-yield junk bonds or investment-grade corporate bonds, type of issuers such as government agencies, or corporations, or even the maturity of the bonds as in short or long term.
Tags: Assets, Direct Proportion, Stock Market
Posted in Investing | No Comments »
