ETF/ Mutual fund/ Pooled account (2015 CFA Mock Q26)

Frank, any chance you could warn us with the source of the question in the title, so that those of us yet to take it don’t see the questions beforehand.
Are you on $1 for each post on here? I have never seen anyone post so many questions!
Good luck with your studies.
 
Sure, will put it in the title. Thanks for the reminder.
 
3. Pooled account will likely be the cheapest. the index is only 5 stocks so trading fees would be minimal. $240M would be a lot of money for an etf.
 
I thought an ETF would be the cheapest. Perhaps the pooled is the cheapest because it is managed by more than 1 manager and therefore costs are lowest?
What is the answer Frank?
 
Here you go.
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CFA Answer = C
The clients are identified as being cost sensitive and, of the three choices offered, pooled accounts generally have the lowest fees.
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Is it common/ popular to use pooled accounts?
 
It’s very common for institutional investors to use pooled accounts which is one of the keys to the questions. Ideally they’d have their own separate account, but that’s out of scope for L3 I believe. Had the question asked about an individual investor with $10k to invest an ETF would have been the better choice.
There’s a grey area between the ETF and pooled account, but pooled account is the better choice between the two.
 
Thanks.
For individual, similar strategy will be classified into one composite. Is it possible to use pooled account method to avoid dispersion as well as lower the cost?
 
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