When taking the SIE mutual fund questions can be confusing.
First of all, you should know what an open-end versus closed-end fund is when it comes to this section. With many more steps involved, in today’s post we attempt to shine a little light on this section. It is a particularly confusing one due mostly confusing for its jargon.
SIE Mutual Fund Questions: How To
In our experience at Professional Exam Tutoring, investment companies tend to cause some headaches. These companies include: i) Face Amount Certificates ii) Unit Investment Trusts, and iii) Management Companies.
You’ll notice nowhere in that list is any mention of a mutual fund. Let alone, an open-end or closed-end fund.
Within management investment companies, open-end and closed-end funds reside definitionally. Both of these funds are considered “managed” since there should be an active portfolio manager involved with each.
Furthermore, you should also know that when the exam refers to a mutual fund that they are specifically referring to an open-end fund. For example, if the questions states that an investor is interested in the XYZ Growth Fund, the term “fund” implies mutual fund, and the default mutual fund is a Class A fund (which we discuss next).
Classes
Going a step further, mutual funds tend to have different share classes. Simply put the share classes discussed on the SIE Exam are Class A, Class B, and Class C.
Whether the original person in charge of naming these classes had the alphabet in mind, is an open question, but you can remember that Class A shares have their sales charges upfront which nicely coincides with the fact that “A” is the first letter of the alphabet.
For Class B shares, the fee is on the backend (Another tip: Think back end starts with a “B.”)
Class C shares are sometimes both front end or backend sales charges.
Given the jargon, this section needs a little time to unpack the different definitions and meanings of the different classes. That said, once you have this down, this should add another few points to your exam.
Overall, this exam is a fairly wide ranging test by topic. If you need help with any specific one, feel free to reach out. Good luck!