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Title: CFA Level 1 - Portfolio Management and Wealth Planning
Description: I create this summary of knowledge related to CFA level 1 for my 2017 December exam. I got into the top 10% with this. Hope this can help you. Please note that this does not guarantee for your pass, which requires dedication, hardwork and consistency. In case having trouble with any part, please refer to CFA notebook/Schwesser.
Description: I create this summary of knowledge related to CFA level 1 for my 2017 December exam. I got into the top 10% with this. Hope this can help you. Please note that this does not guarantee for your pass, which requires dedication, hardwork and consistency. In case having trouble with any part, please refer to CFA notebook/Schwesser.
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Concepts
Portfolio approach to investing
Types and characteristics of
investment management clients
Defined contribution pension /
Defined benefit pension
Description
Portfolio management
Portfolio perspective: evaluate individual investments by their contribution to the risk and return of a portfolio
Diversified portfolio โ reduced risk @ given level of expected return
...
๐ ๐ก๐๐๐๐๐๐ ๐๐๐ฃ๐๐๐ก๐๐๐ ๐๐ ๐๐๐ก๐ข๐๐๐ ๐๐๐ ๐กโ๐ ๐ ๐ ๐ก๐๐๐๐
Investor type
Risk tolerance
Investment horizon
Liquidity needs
Income needs
Individuals
Depend on individual
Depend on individual
Depend on individual
Depend on individual
Banks
Low
Short
High
Pay interest
Endowments
High
Long
Low
Spending level
Insurance
Low
Life insurance - Long
Property & Casualty - Short
High
Low
Mutual funds
Depend on fund
Depend on fund
Depend on fund
Depend on fund
Defined benefit pension
Defined contribution pension plan
High
Long
Definition: Firm promises to contributes a sum each period to the employee's retirement
account
Investment decisions are left to the employee
Employee assumes all investment risk
Firm makes no promise to employee about the future value of the plan assets
Steps in portfolio management
process
Low
Defined benefit pension plan
Depend on age
Definition: Firms promises to make periodic payments to employees after retirement
Firm contributes to a fund established to provide the promised future benefits
Firm assumed all investment risk
Poor performance of fund โ increase required contribu on from ๏ฌrm
Step 1 - Planning step: Analyse investor's risk tolerance, return objectives, time horizon, tax exposure, liquidity needs, income needs, etc
...
IPS should be reviewed / updated
periodically, or whenever there are significant changes in objectives and constraints
Step 2 - Execution step: Construct portfolio by determining suitable allocations to various asset classes based on IPS
- Top-down analysis : Examine and forecast macroeconomic conditions (GDP, inflation, interest rates) โ iden fy most a rac ve asset classes
- Bottom-up seurity analysis: Use model valuations to identify undervalued securities
Step 3 - Feedback step: Monitor and rebalance the portfolio to adjust asset classes allocations and securities holding in respond to the market performance; evaluate portfolio's
performance against benchmark (IPS)
Mutual fund
Definition: a form of pooled investment
...
- Do not take new investments into the fund or redeem investor shares
Title: CFA Level 1 - Portfolio Management and Wealth Planning
Description: I create this summary of knowledge related to CFA level 1 for my 2017 December exam. I got into the top 10% with this. Hope this can help you. Please note that this does not guarantee for your pass, which requires dedication, hardwork and consistency. In case having trouble with any part, please refer to CFA notebook/Schwesser.
Description: I create this summary of knowledge related to CFA level 1 for my 2017 December exam. I got into the top 10% with this. Hope this can help you. Please note that this does not guarantee for your pass, which requires dedication, hardwork and consistency. In case having trouble with any part, please refer to CFA notebook/Schwesser.