hi there wrt iv: i dont get the " transaction fees on trades between two funds could be reduced by crossing trades between the funds". what does this mean? iii: " a global approach may be better suited to the low leverage category where there are fewer country specifix factors that need to be accounted for in selecting stocks" i dont get at all the entire sentence also global approach? thanks
Crossing is a process whereby a large institution (eg an investment bank) that has many large clients (eg fund managers), talks to a selection of its clients to try to find buyers for the stocks that one of its client wishes to dispose of. Often large holdings of stock can be disposed of more easily and cheaply in this way rather than by selling many small tranches through the market.
Hi The question tells us this is a global equity fund ie it selects from and invests in stocks around the world. The examiners answer to part (ii) suggests that higher leverage companies might be more exposed to some country-specific issues eg the cost of refinancing. So I think this sentence is saying it might be easier to compare those stocks from around the world that are not subject to country-specific issues. Low leverage stocks are less likely to be subject to these issues and so a global approach may work better with low leverage stocks than high leverage stocks. I hope that helps Gresham
