Duration
30h Th
Number of credits
Lecturer
Language(s) of instruction
English language
Organisation and examination
Teaching in the first semester, review in January
Schedule
Units courses prerequisite and corequisite
Prerequisite or corequisite units are presented within each program
Learning unit contents
The course provides students with a deep and wide overview of the role of investment funds in the financial markets as well as the role of fund service providers. It covers the different types of funds, both from a legal and investment perspectives. The course describes the economic ecosystem in which the funds operate, which includes the different service providers (custody, depository, fund administrators, auditors, tax/legal advisors, distributors/placement agents, transfer agents) and stakeholders (supervisory authorities) surrounding the investment funds, including some general information about the fee structure (management fees, service providers' fees).
The course finally provides insights about the size of the market and the legal and administrative conditions around the world as well as in the local environment (it will introduce students to the special case of Luxembourg, one of the leading market place for investment funds).
Part I. Setting up a fund: legal and investment perspectives
Module 1: From MPT to traditional investment funds (mutual funds/UCITS). The first module gives the theoretical material in order to understand the role of investment funds within the Modern Portfolio Theory framework.
Module 2: Innovations in traditional investment funds: Exchange Traded Funds (ETFs), Environmental/Social and Governance factors (ESG), smart beta funds, factor investing, ... The module addresses some paradigm shifts in the industry towards (i) passive management (ii) more beta/risk management and the so-called "smart beta funds" and towards (iii) a clear separation between the management of normal returns (a.k.a. betas) and the management of abnormal returns (a.k.a. alphas) emanating from active managers' unique expertise. The latter topic finally introduces alternative investments that will be covered in the third, fourth and fifth module.
Modules 3 to 5 are dedicated to alternative investment funds. The course provides an overview of investment fund strategies, fund structure, risk and return potential of the major hedge fund, private equity and private debt strategies as well as of real estate funds.
Module 6: Legal structure and regulatory framework
The sixth module covers the legal framework and main investment vehicles for setting up a fund. It covers both European and US regulation.
Module 7: Key steps to set up a fund. The first part concludes with the key steps when setting up an investment fund according to the fund type and the key information to be provided to investors
Part II: Fund administration and ecosystem
Module 8: The role of the management company and of the Alternative Investment Fund Manager (AIFM). Module 8 covers the core functions of the ManCo and AIFM (i.e. portfolio management and risk management) of an investment fund according to its investment policy and regulatory status.
Module 9: Depositary services. Module 9 presents the role of the depositary bank for traditional and alternative funds as well as highlights their differences. The course will cover in details the duties of these service providers but also the implications of the contractual relationship with the fund sponsor. It will finally also provide students with market information (major players) and the current challenges with regard to new legal requirements.
Module 10: Fund administration and audit. The last module covers the service of fund administration (fees payment, prospectus and reporting) and accounting (NAV calculations, ...). It finally covers the independent audit function and introduces students to supervision bodies and legal requirements.
Learning outcomes of the learning unit
Students will develop the following individual capacities:
(1) Students will be able to differentiate the (i) investment strategies, (ii) risk and return potential and (iii) targeted investors of different types of funds.
(2) Students will be able to establish a threefold strategy to set up an investment fund: deciding on its financial strategy, its organizational/legal structure and its distribution channel including the targeted investors. For answering this concrete complex and transversal financial management problems, students will need to collect market data, model financial information, perform interviews, research information autonomously.
(3) Students will be able to execute the financial management of an investment fund. This includes the process to establish a fund, selecting or in-sourcing the service providers and organizing the distribution channels.
(4) Students will understand the key evolutions within the global fund landscape including its administrative, legal and economic contexts. Students will need to adapt their management practices in this specific context.
(5) They will strengthen their communication skills in business related problems and in English.
This course contributes to the following Intended Learning Outcomes :
ILO-2 : Gaining the knowledge and understanding of one of the proposed fields of concentration or to gain deep knowledge in the field of the management being already specialized through a first University Master Degree .
ILO-5 : Integrate autonomously researched information, tools, knowledge and context to build and propose, either individually or as part of a team, original, creative and viable solutions to concrete complex management problems, whether real or simulated, taking into account, when necessary, the human, social and legal context.
ILO-6 : Ability to speak 2 foreign languages: C1 in English and B2 in one other language.
ILO-7 : Being capable of professional team work
ILO-8 : Developing leadership
ILO-9 : Developing a critical sense (arguing)
ILO-10 : Developing a transversal, global vision
ILO-11 : Creative conception of solutions
ILO-12 : Professional capacity for oral communication
ILO-13 : Professional capacity for written communication
Prerequisite knowledge and skills
The course groups students with different backgrounds and the course project will benefit from this diversity.
Independently of their profile, students should still all have basic knowledge in investments and portfolio management, law, audit and accounting.
Planned learning activities and teaching methods
The course consists of 10 lectures of three hours which provide both the academic and the practitioners' views on the current issues in the Fund Industry. Professionals in Fund Industry from the Luxembourg market place actively participate to the course. Luxembourg is by far the European leader (and second in the world behind the United States) in the mutual fund industry with about 15,000 funds in 2018 (both AIFs and UCITS).
The course uses the following teaching approaches:
- Lectures
- Workshops with practitioners
- Workshop with researchers
- Problem-based learning (group work): The group assignment includes to work on a concrete complex and transversal financial management problems taking advantage of the different student profiles (Law, Economics, Banking and Asset Management, Financial Analysis and Audit) attending the class.
- Data collection on financial datasets (Preqin, Morningstar, Eikon, Eurekahedge)
Mode of delivery (face-to-face ; distance-learning)
The course is composed of 10 face-to-face lectures (including workshops with practitioners). Student active participation to these lectures will account for 20% of the course grade. Students will have the unique opportunity to meet key players in the fund industry ecosystem including fund managers/investment advisors (from different types of fund), depositary banks, fund lawyers, fund auditor, fund accountants, alternative investment fund manager and management company, fund distributor.
Recommended or required readings
Mandatory readings
The mandatory course material will be available on the course web page on lol@: http://lola.hec.ulg.ac.be
Complimentary/Recommended readings
Andrew W. Lo, The Dynamics of the Hedge Fund Industry
Matthew Hudson, Funds: Private Equity, Hedge and All Core Structures (The Wiley Finance Series) 1st Edition
Rober Pozen et al., The Fund Industry: How Your Money is Managed Hardcover - February 8, 2011
Owen Concannon, CFA Institute Industry Guides: The Asset Management Industry Paperback - April 3, 2015
Assessment methods and criteria
The course grade is split as follows:
- 50% grade is a group project where students, in multidisciplinary teams, will work on a challenge called "set up your fund". For performing their assignment, students will need to research autonomously information regarding their assignment through access to performance datasets (Preqin, Morningstar, Eikon Refinitiv, Eurekahedge) and by performing, on their own, interviews of business professionals (met during the course or not).
- 30% grade is an individual multiple choice exam (closed book).
-
20% individual active participation to class and group project. Different activities will be performed in classroom or outside lecture hours during lecture hours to evaluate the student. This might include, but is not limited, to individual quizzes in class, presentation in class of progress on the group project, active and relevant Questions and Answers during lectures.
Since a group project represents a substantial part of the course grade, course enrollment will be closed after October 31st as well as group enrollment. Each student should be enrolled in a group by that date to be authorized to enroll into the course and/or to take the January exam.
Retake exam
- Students who fail the first session exam or do not present themselves at the exam will have to (re)take the exam in the second session organized in August/September. There is no intermediary session.
- Students who did not participate to the group project, will not be allowed to participate to the first session's exam. They will directly take the second session written exam. They will automatically receive 0/20 for their ability to work in group.
Work placement(s)
Organizational remarks
Students have the opportunity to ask questions on the material during the class and at the end of each session. Outside the course hours, students should send their questions to the teaching assistant maxime.ledent@uliege.be who will organize a questions and answers session or an individual meeting.
Students are invited to check the lol@ platform on a regular basis for any practical information regarding the course or any schedule change.
Contacts
Professor:
Marie Lambert - Professor at HEC Liège - marie.lambert@uliege.be
Teaching assistant:
Maxime Ledent - maxime.ledent@uliege.be
Adaptation of teaching commitments following the COVID-19 pandemic for the May-June 2020 session
Teaching methods implemented : distance-learning
Assessment subjects
Assessment methods
Contacts
Adaptation of teaching commitments following the COVID-19 pandemic for the Aug-Sept 2020 session
Assessment subjects
All ten modules described above (Learning unit contents) are subject to examination.
Assessment methods
August 2020 retake exam.
Oral examination with 10 minutes preparation time and 15 minutes discussion time. You will receive two questions to prepare. Preparation time will take place online (on collaborate) in the presence of the professor. Oral examination will discuss these questions and related sub-questions.
Platform: Individual links will be generated from the tool "collaborate" on e-campus. Your individual link as well as time schedule will be sent by email one week before the exam and under the condition he/she registered to the exam. A link to register to the exam is available on lol@: http://lola.hec.uliege.be/course/view.php?id=61. You will be asked to connect at least 20 minutes before your time schedule to test your video/micro. Any problem should be reported in due time and before the exam actually starts so that the exam can start on time.
Grade split. The group work and individual class participation will be taken into account for respectively 50% and 20% of your grade. Your oral exam will account for 30%.
For students who have not participated to the course group work and to the continuous evaluation which constitutes a big part of the evaluation, they are allowed to take the oral exam but their oral exam will count for 80% of their grade and they will receive a 0 grade for their ability to work in group (20% of their grade).
Contacts
Any technical issue during the exam should be reported directly to the following number: 04 232 72 11. If during the exams, students have questions on its content, they should report it to the same number.