Capped funds are just what they sound like...funds with a cap on them. No, these aren't the funds that are balding and want to hide it. It means there's a cap on expenses being charged to the investors holding shares in that fund.
Investment companies charge the people they handle investments for. It's like a participation fee, or the fee the management company collects for offering its expertise to the investor. Picture the investor as the queen asking for a favor from the management company Rumpelstiltskin. This fee setup specifies exactly what the fees will be, and keeps the investment company from collecting a boatload of extra fees and the first-born kid too (unless your kid is in the Terrible Twos and you'd like him to live with Rumpelstiltskin for a bit...totally up to you).
Capping the expenses outlines a fee schedule of sorts, so the investor knows exactly what they are paying and why, and also sets up a process where the company has to seek approval from its management board in order to change the fees. Once it's approved, the investors are notified of the change and have the option to leave the company (and their Stiltskin-like ways).
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Finance: What is an Omnibus Account?111 Views
Finance a la shmoop. What is an omnibus account?
Herbi just eats leaves, Carni just eats meat, Omni well it's pretty much [Different buses eating stuff]
everything. So yeah an omnibus as in bus-i-ness or business account services is
a bunch of investors who've all pitched in or wired in their capital to become a
percentage owner of that omnibus account. Why would people do this? Scale, volume,
discounts size, heft. When you have a lot of money in an account basic things like [Lots of money in a suitcase]
audit and legal fees and brokerage services and the fees with them and
other one-off costs get amortized across a lot of people in dollars invested [Definition of Amortization]
rather than being laid entirely or solely on one investor where they can
then be a meaningful percentage of the total and with an omnibus account you [Bus labelled Omni eating leaves]
also get anonymity since it's a broker dealing in street name with the account [Anonymity stamp]
interfacing with the street well investors can live if they want in the
lovely dark shadows of Erewhon. Omnibus accounts are sort of like your own [Full moon in a dark sky]
custom mutual fund without the whole nav, net asset value stamp requirements at
the end of each trading day and all the other regulations and filings and legal
crap needed for publicly offered securities it's like having a fully [Book labelled my very own omnibus account]
gassed up bus with a working GPS and Waze system you can drive anywhere you [Guy sat on a bus]
want on the investing landscape you don't have to tell anyone outside of
your own partners about it, and it works great as long as you all want to eat the
same kind of financial cooking.. [Omni asking Carni if he is going to finish his food]
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