Fund Investment Solicitor (펀드투자권유대행인) key terms

When soliciting a fund, the seller must first learn the investor's investment purpose, financial situation, and investment experience, then confirm the product fits that investor before recommending it. Selling without this check breaches the duty.

A weaker check applied when the investor declines to provide personal information or the product is not recommended but merely offered. The seller must still judge whether the product is appropriate for the investor and warn against purchase if not.

The obligation to explain to the investor, using documents, the fund's structure, investment risks, fees, redemption conditions, and other material contents so the investor can make an informed decision. The investor must confirm receipt in writing.

The statutory disclosure document a collective investment scheme must deliver to investors before subscription. It covers investment policy, risks, fees, redemption, and the management company, and must reflect the latest amendments.

A short, standardized summary drawn from the prospectus that highlights the product's key features, principal risks, and fee structure in plain language. It helps retail investors grasp the essentials quickly but does not replace the full prospectus.

A condensed version of the investment prospectus permitted for certain products and investors, presenting core information in a shortened format. Delivery of the simplified version can substitute for the full prospectus only where the rules allow.

A vehicle that pools money from two or more investors without running a business itself and invests it in securities, real estate, or other assets, with the gains and losses shared among investors. Funds are the typical example.

The licensed entity that establishes and manages a collective investment scheme, deciding the investment policy and executing trades for the fund's account. It owes fiduciary duties to investors and must manage conflicts of interest.

A bank or similar institution that safekeeps the fund's assets separately from the manager's own assets and supervises the manager's investment instructions. This separation is a core investor protection device against misappropriation.

A financial institution authorized to sell fund shares or units to investors, receive subscriptions and redemption requests, and deliver prospectuses. It is the counterparty a fund solicitor usually represents.

A person who, under a contract with a distributor, solicits fund investments from customers but does not execute orders or handle investor money. Registration with the financial authority and completion of required education are prerequisites.

Actively recommending or inducing a specific investor to buy, sell, or hold a financial product, including unsolicited advice presented as a recommendation. Generic information without an inducement is not solicitation.

A ban on misleading or coercive sales practices, such as guaranteeing principal or returns, promising to absorb losses, or pressing a customer to buy against their will. Violations trigger sanctions and civil liability.

A solicitor may not tell an investor that the principal is guaranteed or that losses will be compensated unless the product is legally structured to provide such protection. Even then, the guarantee must be accurately described.

A written record of the investor's investment purpose, asset situation, and investment experience, obtained before solicitation. It is the evidentiary basis for the suitability or appropriateness judgment.

The possibility that the fund's value falls and the investor loses part or all of the invested amount. Principal loss is inherent in market, credit, liquidity, and currency risks and must be disclosed, not concealed.

A statistical measure of how much a fund's return fluctuates over time. Higher volatility means wider swings in value and generally signals greater uncertainty for the investor, though it is not the same as risk of permanent loss.

A common risk metric showing how far a fund's periodic returns typically deviate from its average return. It is used in fund comparisons and risk ratings as a numerical expression of volatility.

A risk-adjusted performance measure calculated as excess return over the risk-free rate divided by standard deviation. A higher value means the fund earned more return per unit of risk taken.

A reference index against which a fund's performance is measured, such as a stock or bond index matching the fund's strategy. Comparing returns with the benchmark shows whether the manager added value.

The degree to which an index fund's returns deviate from its benchmark index over time. Small tracking error indicates close index replication, which is the goal of passive funds.

An index-tracking fund whose shares are listed and traded on an exchange like stocks. It typically carries lower fees than active funds and can be bought or sold intraday at market prices.

A fund investing in short-term, high-quality debt instruments such as commercial paper and certificates of deposit. It aims for stable value and liquidity, but it is not a deposit and its value can still decline.

A fund that mainly invests in bonds and other fixed-income securities. Its value moves inversely with interest rates and is also exposed to the credit risk of issuers.

A fund that invests primarily in stocks and therefore carries relatively high price volatility in exchange for higher long-term return potential. Suitability for conservative investors must be carefully assessed.

A fund holding a mix of stocks and bonds, with the ratio set by its investment policy. Its risk profile sits between equity and bond funds, and the actual asset mix should be checked.

The risk that bond prices fall when market interest rates rise, lowering the fund's net asset value. Longer-maturity bonds are generally more sensitive to rate changes.

The risk that a bond issuer defaults or its credit rating is downgraded, reducing the bond's value. Funds holding lower-rated debt carry higher credit risk.

The risk that a fund cannot sell assets quickly at a fair price, or that redemption requests are delayed or suspended. It tends to rise in stressed markets and for funds holding illiquid assets.

A measure of a bond or bond fund's sensitivity to interest rate changes, expressed roughly in years. A duration of three means a one-percentage-point rate rise lowers value by about three percent.

The fund's total assets minus liabilities, divided by the number of units outstanding, calculated daily after market close. Subscription and redemption are settled at this price, not at an intraday quote.

The investor's request to the distributor to buy back fund units at the applicable net asset value. Settlement follows the fund's rules, and some funds impose a redemption fee or defer payment.

A charge deducted when an investor redeems units, often applied on a sliding scale that shrinks as the holding period lengthens. It discourages short-term trading and is distinct from sales fees.

A fee deducted from the subscription amount at the time of purchase, reducing the amount actually invested. It is expressed as a percentage of the invested amount and disclosed in the prospectus.

A sales charge taken when the investor redeems rather than when subscribing, usually decreasing over the holding period or waived after a set term. It must be explained before purchase.

An ongoing annual fee paid out of fund assets to the distributor for sales and servicing, included in the total expense ratio. Because it is charged continuously, it reduces returns over the holding period.

An annual fee paid from fund assets to the asset management company for managing the portfolio. It accrues daily and is reflected in the net asset value rather than billed separately.

The total of all ongoing fees and expenses charged to a fund, expressed as an annual percentage of net assets. It lets investors compare the true cost of different funds.

The procedure by which a person intending to act as a fund solicitation agent registers with the association after meeting education and examination requirements. Acting without registration is prohibited.

The duty to identify and control situations where the solicitor's or distributor's own interest could distort advice to the investor, for example higher commissions on certain products. Disclosure and internal controls are required.