{"product_id":"portfolio-management-in-practice-volume-1-9781119743699","title":"Portfolio Management in Practice Volume 1","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003e\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003cp\u003ePreface xxi\u003c\/p\u003e \u003cp\u003eAcknowledgments xxiii\u003c\/p\u003e \u003cp\u003eAbout the CFA Institute Investment Series xxv\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 1 Professionalism in the Investment Industry 1\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 1\u003c\/p\u003e \u003cp\u003e1. Introduction 1\u003c\/p\u003e \u003cp\u003e2. Professions 2\u003c\/p\u003e \u003cp\u003e2.1. How Professions Establish Trust 2\u003c\/p\u003e \u003cp\u003e2.2. Professions Are Evolving 4\u003c\/p\u003e \u003cp\u003e3. Professionalism in Investment Management 5\u003c\/p\u003e \u003cp\u003e3.1. Trust in the Investment Industry 6\u003c\/p\u003e \u003cp\u003e3.2. CFA Institute as an Investment Professional Body 6\u003c\/p\u003e \u003cp\u003e4. Expectations of Investment Professionals 7\u003c\/p\u003e \u003cp\u003e5. Framework for Ethical Decision-Making 9\u003c\/p\u003e \u003cp\u003e5.1. Description of the Framework 9\u003c\/p\u003e \u003cp\u003e6. Challenges for Investment Professionals 11\u003c\/p\u003e \u003cp\u003e7. Summary 12\u003c\/p\u003e \u003cp\u003eReferences 13\u003c\/p\u003e \u003cp\u003ePractice Problems 13\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 2 Fintech in Investment Management 15\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 15\u003c\/p\u003e \u003cp\u003e1. Introduction 15\u003c\/p\u003e \u003cp\u003e2. What is Fintech? 16\u003c\/p\u003e \u003cp\u003e3. Big Data 17\u003c\/p\u003e \u003cp\u003e3.1. Sources of Big Data 18\u003c\/p\u003e \u003cp\u003e3.2. Big Data Challenges 20\u003c\/p\u003e \u003cp\u003e4. Advanced Analytical Tools: Artificial Intelligence and Machine Learning 20\u003c\/p\u003e \u003cp\u003e4.1. Types of Machine Learning 22\u003c\/p\u003e \u003cp\u003e5. Data Science: Extracting Information from Big Data 23\u003c\/p\u003e \u003cp\u003e5.1. Data Processing Methods 23\u003c\/p\u003e \u003cp\u003e5.2. Data Visualization 24\u003c\/p\u003e \u003cp\u003e6. Selected Applications of Fintech to Investment Management 25\u003c\/p\u003e \u003cp\u003e6.1. Text Analytics and Natural Language Processing 26\u003c\/p\u003e \u003cp\u003e6.2. Robo-Advisory Services 27\u003c\/p\u003e \u003cp\u003e6.3. Risk Analysis 29\u003c\/p\u003e \u003cp\u003e6.4. Algorithmic Trading 30\u003c\/p\u003e \u003cp\u003e7. Distributed Ledger Technology 30\u003c\/p\u003e \u003cp\u003e7.1. Permissioned and Permissionless Networks 32\u003c\/p\u003e \u003cp\u003e7.2. Applications of Distributed Ledger Technology to Investment Management 32\u003c\/p\u003e \u003cp\u003eSummary 34\u003c\/p\u003e \u003cp\u003ePractice Problems 35\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 3 Capital Market Expectations, Part 1: Framework and Macro Considerations 37\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 37\u003c\/p\u003e \u003cp\u003e1. Introduction 38\u003c\/p\u003e \u003cp\u003e2. Framework and Challenges 38\u003c\/p\u003e \u003cp\u003e2.1. A Framework for Developing Capital Market Expectations 39\u003c\/p\u003e \u003cp\u003e2.2. Challenges in Forecasting 42\u003c\/p\u003e \u003cp\u003e3. Economic and Market Analysis 50\u003c\/p\u003e \u003cp\u003e3.1. The Role of Economic Analysis 51\u003c\/p\u003e \u003cp\u003e3.2. Analysis of Economic Growth 51\u003c\/p\u003e \u003cp\u003e3.3. Approaches to Economic Forecasting 57\u003c\/p\u003e \u003cp\u003e3.4. Business Cycle Analysis 61\u003c\/p\u003e \u003cp\u003e3.5. Analysis of Monetary and Fiscal Policy 68\u003c\/p\u003e \u003cp\u003e3.6. International Interactions 77\u003c\/p\u003e \u003cp\u003e4. Summary 81\u003c\/p\u003e \u003cp\u003eReferences 85\u003c\/p\u003e \u003cp\u003ePractice Problems 85\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 4 Capital Market Expectations, Part 2: Forecasting Asset Class Returns 93\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 93\u003c\/p\u003e \u003cp\u003e1. Introduction 94\u003c\/p\u003e \u003cp\u003e2. Overview of Tools and Approaches 94\u003c\/p\u003e \u003cp\u003e2.1. The Nature of the Problem 94\u003c\/p\u003e \u003cp\u003e2.2. Approaches to Forecasting 95\u003c\/p\u003e \u003cp\u003e3. Forecasting Fixed-Income Returns 96\u003c\/p\u003e \u003cp\u003e3.1. Applying DCF to Fixed Income 96\u003c\/p\u003e \u003cp\u003e3.2. The Building Block Approach to Fixed-Income Returns 98\u003c\/p\u003e \u003cp\u003e3.3. Risks in Emerging Market Bonds 104\u003c\/p\u003e \u003cp\u003e4. Forecasting Equity Returns 107\u003c\/p\u003e \u003cp\u003e4.1. Historical Statistics Approach to Equity Returns 107\u003c\/p\u003e \u003cp\u003e4.2. DCF Approach to Equity Returns 107\u003c\/p\u003e \u003cp\u003e4.3. Risk Premium Approaches to Equity Returns 111\u003c\/p\u003e \u003cp\u003e4.4. Risks in Emerging Market Equities 115\u003c\/p\u003e \u003cp\u003e5. Forecasting Real Estate Returns 117\u003c\/p\u003e \u003cp\u003e5.1. Historical Real Estate Returns 117\u003c\/p\u003e \u003cp\u003e5.2. Real Estate Cycles 117\u003c\/p\u003e \u003cp\u003e5.3. Capitalization Rates 118\u003c\/p\u003e \u003cp\u003e5.4. The Risk Premium Perspective on Real Estate Expected Return 120\u003c\/p\u003e \u003cp\u003e5.5. Real Estate in Equilibrium 120\u003c\/p\u003e \u003cp\u003e5.6. Public vs. Private Real Estate 121\u003c\/p\u003e \u003cp\u003e5.7. Long-Term Housing Returns 122\u003c\/p\u003e \u003cp\u003e6. Forecasting Exchange Rates 124\u003c\/p\u003e \u003cp\u003e6.1. Focus on Goods and Services, Trade, and the Current Account 125\u003c\/p\u003e \u003cp\u003e6.2. Focus on Capital Flows 127\u003c\/p\u003e \u003cp\u003e7. Forecasting Volatility 132\u003c\/p\u003e \u003cp\u003e7.1. Estimating a Constant VCV Matrix with Sample Statistics 132\u003c\/p\u003e \u003cp\u003e7.2. VCV Matrices from Multi-Factor Models 133\u003c\/p\u003e \u003cp\u003e7.3. Shrinkage Estimation of VCV Matrices 134\u003c\/p\u003e \u003cp\u003e7.4. Estimating Volatility from Smoothed Returns 135\u003c\/p\u003e \u003cp\u003e7.5. Time-Varying Volatility: ARCH Models 136\u003c\/p\u003e \u003cp\u003e8. Adjusting a Global Portfolio 137\u003c\/p\u003e \u003cp\u003e8.1. Macro-Based Recommendations 138\u003c\/p\u003e \u003cp\u003e8.2. Quantifying the Views 140\u003c\/p\u003e \u003cp\u003eSummary 141\u003c\/p\u003e \u003cp\u003eReferences 143\u003c\/p\u003e \u003cp\u003ePractice Problems 145\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 5 Overview of Asset Allocation 155\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 155\u003c\/p\u003e \u003cp\u003e1. Introduction 155\u003c\/p\u003e \u003cp\u003e2. Asset Allocation: Importance in Investment Management 157\u003c\/p\u003e \u003cp\u003e3. The Investment Governance Background to Asset Allocation 158\u003c\/p\u003e \u003cp\u003e3.1. Governance Structures 158\u003c\/p\u003e \u003cp\u003e3.2. Articulating Investment Objectives 159\u003c\/p\u003e \u003cp\u003e3.3. Allocation of Rights and Responsibilities 160\u003c\/p\u003e \u003cp\u003e3.4. Investment Policy Statement 162\u003c\/p\u003e \u003cp\u003e3.5. Asset Allocation and Rebalancing Policy 162\u003c\/p\u003e \u003cp\u003e3.6. Reporting Framework 163\u003c\/p\u003e \u003cp\u003e3.7. The Governance Audit 163\u003c\/p\u003e \u003cp\u003e4. The Economic Balance Sheet and Asset Allocation 165\u003c\/p\u003e \u003cp\u003e5. Approaches to Asset Allocation 169\u003c\/p\u003e \u003cp\u003e5.1. Relevant Objectives 171\u003c\/p\u003e \u003cp\u003e5.2. Relevant Risk Concepts 172\u003c\/p\u003e \u003cp\u003e5.3. Modeling Asset Class Risk 173\u003c\/p\u003e \u003cp\u003e6. Strategic Asset Allocation 180\u003c\/p\u003e \u003cp\u003e6.1. Asset Only 182\u003c\/p\u003e \u003cp\u003e6.2. Liability Relative 188\u003c\/p\u003e \u003cp\u003e6.3. Goals Based 191\u003c\/p\u003e \u003cp\u003e7. Implementation Choices 195\u003c\/p\u003e \u003cp\u003e7.1. Passive\/Active Management of Asset Class Weights 196\u003c\/p\u003e \u003cp\u003e7.2. Passive\/Active Management of Allocations to Asset Classes 196\u003c\/p\u003e \u003cp\u003e7.3. Risk Budgeting Perspectives in Asset Allocation and Implementation 200\u003c\/p\u003e \u003cp\u003e8. Rebalancing: Strategic Considerations 201\u003c\/p\u003e \u003cp\u003e8.1. A Framework for Rebalancing 203\u003c\/p\u003e \u003cp\u003e8.2. Strategic Considerations in Rebalancing 204\u003c\/p\u003e \u003cp\u003e9. Summary 206\u003c\/p\u003e \u003cp\u003eReferences 207\u003c\/p\u003e \u003cp\u003ePractice Problems 209\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 6 Principles of Asset Allocation 211\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 211\u003c\/p\u003e \u003cp\u003e1. Introduction 212\u003c\/p\u003e \u003cp\u003e2. Developing Asset Only Asset Allocations 213\u003c\/p\u003e \u003cp\u003e2.1. Mean–Variance Optimization: Overview 213\u003c\/p\u003e \u003cp\u003e2.2. Monte Carlo Simulation 225\u003c\/p\u003e \u003cp\u003e2.3. Criticisms of Mean–Variance Optimization 228\u003c\/p\u003e \u003cp\u003e2.4. Addressing the Criticisms of Mean–Variance Optimization 230\u003c\/p\u003e \u003cp\u003e2.5. Allocating to Less Liquid Asset Classes 241\u003c\/p\u003e \u003cp\u003e2.6. Risk Budgeting 243\u003c\/p\u003e \u003cp\u003e2.7. Factor-Based Asset Allocation 246\u003c\/p\u003e \u003cp\u003e3.1. Characterizing the Liabilities 250\u003c\/p\u003e \u003cp\u003e3.2. Approaches to Liability-Relative Asset Allocation 253\u003c\/p\u003e \u003cp\u003e3.3. Examining the Robustness of Asset Allocation Alternatives 264\u003c\/p\u003e \u003cp\u003e3.4. Factor Modeling in Liability-Relative Approaches 266\u003c\/p\u003e \u003cp\u003e4. Developing Goals-Based Asset Allocations 266\u003c\/p\u003e \u003cp\u003e4.1. The Goals-Based Asset Allocation Process 268\u003c\/p\u003e \u003cp\u003e4.2. Describing Client Goals 270\u003c\/p\u003e \u003cp\u003e4.3. Constructing Sub-Portfolios 272\u003c\/p\u003e \u003cp\u003e4.4. The Overall Portfolio 276\u003c\/p\u003e \u003cp\u003e4.5. Revisiting the Module Process in Detail 277\u003c\/p\u003e \u003cp\u003e4.6. Periodically Revisiting the Overall Asset Allocation 281\u003c\/p\u003e \u003cp\u003e4.7. Issues Related to Goals-Based Asset Allocation 281\u003c\/p\u003e \u003cp\u003e5. Heuristics and Other Approaches to Asset Allocation 283\u003c\/p\u003e \u003cp\u003e5.1. The “120 minus your age” rule. 283\u003c\/p\u003e \u003cp\u003e5.2. The 60\/40 stock\/bond heuristic. 284\u003c\/p\u003e \u003cp\u003e5.3. The endowment model. 285\u003c\/p\u003e \u003cp\u003e5.4. Risk parity. 286\u003c\/p\u003e \u003cp\u003e5.5. The 1\/\u003ci\u003eN \u003c\/i\u003erule. 288\u003c\/p\u003e \u003cp\u003e6. Portfolio Rebalancing in Practice 288\u003c\/p\u003e \u003cp\u003e7. Conclusions 292\u003c\/p\u003e \u003cp\u003eReferences 294\u003c\/p\u003e \u003cp\u003ePractice Problems 296\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 7 Asset Allocation with Real-World Constraints 307\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 307\u003c\/p\u003e \u003cp\u003e1. Introduction 307\u003c\/p\u003e \u003cp\u003e2. Constraints in Asset Allocation 308\u003c\/p\u003e \u003cp\u003e2.1. Asset Size 308\u003c\/p\u003e \u003cp\u003e2.2. Liquidity 314\u003c\/p\u003e \u003cp\u003e2.3. Time Horizon 317\u003c\/p\u003e \u003cp\u003e2.4. Regulatory and Other External Constraints 321\u003c\/p\u003e \u003cp\u003e3. Asset Allocation for the Taxable Investor 327\u003c\/p\u003e \u003cp\u003e3.1. After-Tax Portfolio Optimization 321\u003c\/p\u003e \u003cp\u003e3.2. Taxes and Portfolio Rebalancing 331\u003c\/p\u003e \u003cp\u003e3.3. Strategies to Reduce Tax Impact 332\u003c\/p\u003e \u003cp\u003e4. Revising the Strategic Asset Allocation 337\u003c\/p\u003e \u003cp\u003e4.1. Goals 337\u003c\/p\u003e \u003cp\u003e5. Short-Term Shifts in Asset Allocation 343\u003c\/p\u003e \u003cp\u003e5.1. Discretionary TAA 344\u003c\/p\u003e \u003cp\u003e5.2. Systematic TAA 345\u003c\/p\u003e \u003cp\u003e6. Dealing with Behavioral Biases in Asset Allocation 349\u003c\/p\u003e \u003cp\u003e6.1. Loss Aversion 349\u003c\/p\u003e \u003cp\u003e6.2. Illusion of Control 350\u003c\/p\u003e \u003cp\u003e6.3. Mental Accounting 351\u003c\/p\u003e \u003cp\u003e6.4. Representativeness Bias 352\u003c\/p\u003e \u003cp\u003e6.5. Framing Bias 352\u003c\/p\u003e \u003cp\u003e6.6. Availability Bias 354\u003c\/p\u003e \u003cp\u003e7. Summary 357\u003c\/p\u003e \u003cp\u003eReferences 359\u003c\/p\u003e \u003cp\u003ePractice Problems 360\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 8 Currency Management: An Introduction 369\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 369\u003c\/p\u003e \u003cp\u003e1. Introduction 369\u003c\/p\u003e \u003cp\u003e2. Review of Foreign Exchange Concepts 370\u003c\/p\u003e \u003cp\u003e2.1. Spot Markets 371\u003c\/p\u003e \u003cp\u003e2.2. Forward Markets 373\u003c\/p\u003e \u003cp\u003e2.3. FX Swap Markets 376\u003c\/p\u003e \u003cp\u003e2.4. Currency Options 377\u003c\/p\u003e \u003cp\u003e3. Currency Risk and Portfolio Return and Risk 377\u003c\/p\u003e \u003cp\u003e3.1. Return Decomposition 378\u003c\/p\u003e \u003cp\u003e3.2. Volatility Decomposition 380\u003c\/p\u003e \u003cp\u003e4. Currency Management: Strategic Decisions 383\u003c\/p\u003e \u003cp\u003e4.1. The Investment Policy Statement 384\u003c\/p\u003e \u003cp\u003e4.2. The Portfolio Optimization Problem 385\u003c\/p\u003e \u003cp\u003e4.3. Choice of Currency Exposures 386\u003c\/p\u003e \u003cp\u003e4.4. Locating the Portfolio Along the Currency Risk Spectrum 389\u003c\/p\u003e \u003cp\u003e4.5. Formulating a Client-Appropriate Currency Management Program 393\u003c\/p\u003e \u003cp\u003e5. Currency Management: Tactical Decisions 395\u003c\/p\u003e \u003cp\u003e5.1. Active Currency Management Based on Economic Fundamentals 396\u003c\/p\u003e \u003cp\u003e5.2. Active Currency Management Based on Technical Analysis 397\u003c\/p\u003e \u003cp\u003e5.3. Active Currency Management Based on the Carry Trade 399\u003c\/p\u003e \u003cp\u003e5.4. Active Currency Management Based on Volatility Trading 401\u003c\/p\u003e \u003cp\u003e6. Tools of Currency Management 406\u003c\/p\u003e \u003cp\u003e6.1. Forward Contracts 407\u003c\/p\u003e \u003cp\u003e6.2. Currency Options 414\u003c\/p\u003e \u003cp\u003e6.3. Strategies to Reduce Hedging Costs and Modify a Portfolio’s Risk Profile 416\u003c\/p\u003e \u003cp\u003e6.4. Hedging Multiple Foreign Currencies 424\u003c\/p\u003e \u003cp\u003e6.5. Basic Intuitions for Using Currency Management Tools 431\u003c\/p\u003e \u003cp\u003e7. Currency Management for Emerging Market Currencies 435\u003c\/p\u003e \u003cp\u003e7.1. Special Considerations in Managing Emerging Market Currency Exposures 435\u003c\/p\u003e \u003cp\u003e7.2. Non-Deliverable Forwards 437\u003c\/p\u003e \u003cp\u003e8. Summary 438\u003c\/p\u003e \u003cp\u003eReferences 441\u003c\/p\u003e \u003cp\u003ePractice Problems 441\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 9 Overview of Fixed-Income Portfolio Management 453\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 453\u003c\/p\u003e \u003cp\u003e1. Introduction 453\u003c\/p\u003e \u003cp\u003e2. Roles of Fixed-Income Securities in Portfolios 454\u003c\/p\u003e \u003cp\u003e2.1. Diversification Benefits 454\u003c\/p\u003e \u003cp\u003e2.2. Benefits of Regular Cash Flows 456\u003c\/p\u003e \u003cp\u003e2.3. Inflation Hedging Potential 457\u003c\/p\u003e \u003cp\u003e3. Fixed-Income Mandates 459\u003c\/p\u003e \u003cp\u003e3.1. Liability-Based Mandates 460\u003c\/p\u003e \u003cp\u003e3.2. Total Return Mandates 464\u003c\/p\u003e \u003cp\u003e4. Bond Market Liquidity 468\u003c\/p\u003e \u003cp\u003e4.1. Liquidity among Bond Market Sub-Sectors 468\u003c\/p\u003e \u003cp\u003e4.2. The Effects of Liquidity on Fixed-Income Portfolio Management 469\u003c\/p\u003e \u003cp\u003e5. A Model for Fixed-Income Returns 471\u003c\/p\u003e \u003cp\u003e5.1. Decomposing Expected Returns 471\u003c\/p\u003e \u003cp\u003e5.2. Estimation of the Inputs 475\u003c\/p\u003e \u003cp\u003e5.3. Limitations of the Expected Return Decomposition 475\u003c\/p\u003e \u003cp\u003e6. Leverage 476\u003c\/p\u003e \u003cp\u003e6.1. Using Leverage 477\u003c\/p\u003e \u003cp\u003e6.2. Methods for Leveraging Fixed-Income Portfolios 477\u003c\/p\u003e \u003cp\u003e6.3. Risks of Leverage 481\u003c\/p\u003e \u003cp\u003e7. Fixed-Income Portfolio Taxation 481\u003c\/p\u003e \u003cp\u003e7.1. Principles of Fixed-Income Taxation 482\u003c\/p\u003e \u003cp\u003e7.2. Investment Vehicles and Taxes 483\u003c\/p\u003e \u003cp\u003e8. Summary 484\u003c\/p\u003e \u003cp\u003eReferences 486\u003c\/p\u003e \u003cp\u003ePractice Problems 486\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 10 Liability-Driven and Index-Based Strategies 493\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 493\u003c\/p\u003e \u003cp\u003e1. Introduction 494\u003c\/p\u003e \u003cp\u003e2. Liability-Driven Investing 495\u003c\/p\u003e \u003cp\u003e3. Interest Rate Immunization—Managing the Interest Rate Risk of a Single Liability 498\u003c\/p\u003e \u003cp\u003e4. Interest Rate Immunization—Managing the Interest Rate Risk of Multiple Liabilities 511\u003c\/p\u003e \u003cp\u003e4.1. Cash Flow Matching 511\u003c\/p\u003e \u003cp\u003e4.2. Duration Matching 514\u003c\/p\u003e \u003cp\u003e4.3. Derivatives Overlay 520\u003c\/p\u003e \u003cp\u003e4.4. Contingent Immunization 524\u003c\/p\u003e \u003cp\u003e5. Liability-Driven Investing—An Example of a Defined Benefit Pension Plan 526\u003c\/p\u003e \u003cp\u003e6. Risks in Liability-Driven Investing 536\u003c\/p\u003e \u003cp\u003e7. Bond Indexes and the Challenges of Matching a Fixed-Income Portfolio to an Index 541\u003c\/p\u003e \u003cp\u003e8. Alternative Methods for Establishing Passive Bond Market Exposure 547\u003c\/p\u003e \u003cp\u003e9. Benchmark Selection 553\u003c\/p\u003e \u003cp\u003e10. Laddered Bond Portfolios 556\u003c\/p\u003e \u003cp\u003e11. Summary 559\u003c\/p\u003e \u003cp\u003eReferences 563\u003c\/p\u003e \u003cp\u003ePractice Problems 564\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 11 Overview of Equity Portfolio Management 573\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 573\u003c\/p\u003e \u003cp\u003e1. Introduction 573\u003c\/p\u003e \u003cp\u003e2. The Roles of Equities in a Portfolio 574\u003c\/p\u003e \u003cp\u003e2.1. Capital Appreciation 574\u003c\/p\u003e \u003cp\u003e2.2. Dividend Income 575\u003c\/p\u003e \u003cp\u003e2.3. Diversification with Other Asset Classes 576\u003c\/p\u003e \u003cp\u003e2.4. Hedge Against Inflation 577\u003c\/p\u003e \u003cp\u003e2.5. Client Considerations for Equities in a Portfolio 577\u003c\/p\u003e \u003cp\u003e3. Equity Investment Universe 579\u003c\/p\u003e \u003cp\u003e3.1. Segmentation by Size and Style 579\u003c\/p\u003e \u003cp\u003e3.2. Segmentation by Geography 581\u003c\/p\u003e \u003cp\u003e3.3. Segmentation by Economic Activity 583\u003c\/p\u003e \u003cp\u003e3.4. Segmentation of Equity Indexes and Benchmarks 585\u003c\/p\u003e \u003cp\u003e4. Income and Costs in an Equity Portfolio 585\u003c\/p\u003e \u003cp\u003e4.1. Dividend Income 586\u003c\/p\u003e \u003cp\u003e4.2. Securities Lending Income 586\u003c\/p\u003e \u003cp\u003e4.3. Ancillary Investment Strategies 587\u003c\/p\u003e \u003cp\u003e4.4. Management Fees 588\u003c\/p\u003e \u003cp\u003e4.5. Performance Fees 588\u003c\/p\u003e \u003cp\u003e4.6. Administration Fees 589\u003c\/p\u003e \u003cp\u003e4.7. Marketing and Distribution Costs 589\u003c\/p\u003e \u003cp\u003e4.8. Trading Costs 589\u003c\/p\u003e \u003cp\u003e4.9. Investment Approaches and Effects on Costs 590\u003c\/p\u003e \u003cp\u003e5. Shareholder Engagement 590\u003c\/p\u003e \u003cp\u003e5.1. Benefits of Shareholder Engagement 591\u003c\/p\u003e \u003cp\u003e5.2. Disadvantages of Shareholder Engagement 592\u003c\/p\u003e \u003cp\u003e5.3. The Role of an Equity Manager in Shareholder Engagement 592\u003c\/p\u003e \u003cp\u003e6. Equity Investment across the Passive–Active Spectrum 594\u003c\/p\u003e \u003cp\u003e6.1. Confidence to Outperform 594\u003c\/p\u003e \u003cp\u003e6.2. Client Preference 595\u003c\/p\u003e \u003cp\u003e6.3. Suitable Benchmark 596\u003c\/p\u003e \u003cp\u003e6.4. Client-Specific Mandates 596\u003c\/p\u003e \u003cp\u003e6.5. Risks\/Costs of Active Management 596\u003c\/p\u003e \u003cp\u003e6.6. Taxes 596\u003c\/p\u003e \u003cp\u003eSummary 597\u003c\/p\u003e \u003cp\u003eReferences 598\u003c\/p\u003e \u003cp\u003ePractice Problems 598\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 12 Passive Equity Investing 601\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 601\u003c\/p\u003e \u003cp\u003e1. Introduction 601\u003c\/p\u003e \u003cp\u003e2. Choosing a Benchmark 603\u003c\/p\u003e \u003cp\u003e2.1. Indexes as a Basis for Investment 603\u003c\/p\u003e \u003cp\u003e2.2. Considerations When Choosing a Benchmark Index 604\u003c\/p\u003e \u003cp\u003e2.3. Index Construction Methodologies 606\u003c\/p\u003e \u003cp\u003e2.4. Factor-Based Strategies 612\u003c\/p\u003e \u003cp\u003e3. Approaches to Passive Equity Investing 615\u003c\/p\u003e \u003cp\u003e3.1. Pooled Investments 615\u003c\/p\u003e \u003cp\u003e3.2. Derivatives-Based Approaches 619\u003c\/p\u003e \u003cp\u003e3.3. Separately Managed Equity Index-Based Portfolios 623\u003c\/p\u003e \u003cp\u003e4. Portfolio Construction 625\u003c\/p\u003e \u003cp\u003e4.1. Full Replication 625\u003c\/p\u003e \u003cp\u003e4.2. Stratified Sampling 627\u003c\/p\u003e \u003cp\u003e4.3. Optimization 628\u003c\/p\u003e \u003cp\u003e4.4. Blended Approach 629\u003c\/p\u003e \u003cp\u003e5. Tracking Error Management 630\u003c\/p\u003e \u003cp\u003e5.1. Tracking Error and Excess Return 630\u003c\/p\u003e \u003cp\u003e5.2. Potential Causes of Tracking Error and Excess Return 632\u003c\/p\u003e \u003cp\u003e5.3. Controlling Tracking Error 632\u003c\/p\u003e \u003cp\u003e6. Sources of Return and Risk in Passive Equity Portfolios 633\u003c\/p\u003e \u003cp\u003e6.1. Attribution Analysis 633\u003c\/p\u003e \u003cp\u003e6.2. Securities Lending 635\u003c\/p\u003e \u003cp\u003e6.3. Investor Activism and Engagement by Passive Managers 637\u003c\/p\u003e \u003cp\u003eSummary 638\u003c\/p\u003e \u003cp\u003eReferences 640\u003c\/p\u003e \u003cp\u003ePractice Problems 641\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 13 Active Equity Investing: Strategies 647\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 647\u003c\/p\u003e \u003cp\u003e1. Introduction 647\u003c\/p\u003e \u003cp\u003e2. Approaches to Active Management 648\u003c\/p\u003e \u003cp\u003e2.1. Differences in the Nature of the Information Used 650\u003c\/p\u003e \u003cp\u003e2.2. Differences in the Focus of the Analysis 651\u003c\/p\u003e \u003cp\u003e2.3. Difference in Orientation to the Data: Forecasting the Future vs. Analyzing the Past 652\u003c\/p\u003e \u003cp\u003e2.4. Differences in Portfolio Construction: Judgment vs. Optimization 652\u003c\/p\u003e \u003cp\u003e3. Types of Active Management Strategies 654\u003c\/p\u003e \u003cp\u003e3.1. Bottom-Up Strategies 654\u003c\/p\u003e \u003cp\u003e3.2. Top-Down Strategies 661\u003c\/p\u003e \u003cp\u003e3.3. Factor-Based Strategies 664\u003c\/p\u003e \u003cp\u003e3.4. Activist Strategies 677\u003c\/p\u003e \u003cp\u003e3.5. Other Strategies 684\u003c\/p\u003e \u003cp\u003e4. Creating a Fundamental Active Investment Strategy 687\u003c\/p\u003e \u003cp\u003e4.1. The Fundamental Active Investment Process 687\u003c\/p\u003e \u003cp\u003e4.2. Pitfalls in Fundamental Investing 690\u003c\/p\u003e \u003cp\u003e5. Creating a Quantitative Active Investment Strategy 694\u003c\/p\u003e \u003cp\u003e5.1. Creating a Quantitative Investment Process 694\u003c\/p\u003e \u003cp\u003e5.2. Pitfalls in Quantitative Investment Processes 698\u003c\/p\u003e \u003cp\u003e6. Equity Investment Style Classification 701\u003c\/p\u003e \u003cp\u003e6.1. Different Approaches to Style Classification 702\u003c\/p\u003e \u003cp\u003e6.2. Strengths and Limitations of Style Analysis 708\u003c\/p\u003e \u003cp\u003e7. Summary 710\u003c\/p\u003e \u003cp\u003eReferences 711\u003c\/p\u003e \u003cp\u003ePractice Problems 712\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 14 Hedge Fund Strategies 719\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 719\u003c\/p\u003e \u003cp\u003e1. Introduction 719\u003c\/p\u003e \u003cp\u003e2. Classification of Hedge Funds and Strategies 721\u003c\/p\u003e \u003cp\u003e3. Equity Strategies 725\u003c\/p\u003e \u003cp\u003e3.1. Long\/Short Equity 725\u003c\/p\u003e \u003cp\u003e3.2. Dedicated Short Selling and Short-Biased 728\u003c\/p\u003e \u003cp\u003e3.3. Equity Market Neutral 732\u003c\/p\u003e \u003cp\u003e4. Event-Driven Strategies 736\u003c\/p\u003e \u003cp\u003e4.1. Merger Arbitrage 737\u003c\/p\u003e \u003cp\u003e4.2. Distressed Securities 740\u003c\/p\u003e \u003cp\u003e5. Relative Value Strategies 744\u003c\/p\u003e \u003cp\u003e5.1. Fixed-Income Arbitrage 744\u003c\/p\u003e \u003cp\u003e5.2. Convertible Bond Arbitrage 749\u003c\/p\u003e \u003cp\u003e6. Opportunistic Strategies 753\u003c\/p\u003e \u003cp\u003e6.1. Global Macro Strategies 753\u003c\/p\u003e \u003cp\u003e6.2. Managed Futures 756\u003c\/p\u003e \u003cp\u003e7. Specialist Strategies 760\u003c\/p\u003e \u003cp\u003e7.1. Volatility Trading 761\u003c\/p\u003e \u003cp\u003e7.2. Reinsurance\/Life Settlements 765\u003c\/p\u003e \u003cp\u003e8. Multi-Manager Strategies 767\u003c\/p\u003e \u003cp\u003e8.1. Fund-of-Funds 768\u003c\/p\u003e \u003cp\u003e8.2. Multi-Strategy Hedge Funds 770\u003c\/p\u003e \u003cp\u003e9. Analysis of Hedge Fund Strategies 774\u003c\/p\u003e \u003cp\u003e9.1. Conditional Factor Risk Model 775\u003c\/p\u003e \u003cp\u003e9.2. Evaluating Equity Hedge Fund Strategies 779\u003c\/p\u003e \u003cp\u003e9.3. Evaluating Multi-Manager Hedge Fund Strategies 784\u003c\/p\u003e \u003cp\u003e10. Portfolio Contribution of Hedge Fund Strategies 787\u003c\/p\u003e \u003cp\u003e10.1. Performance Contribution to a 60\/40 Portfolio 787\u003c\/p\u003e \u003cp\u003e10.2. Risk Metrics 789\u003c\/p\u003e \u003cp\u003e11. Summary 793\u003c\/p\u003e \u003cp\u003eReferences 796\u003c\/p\u003e \u003cp\u003ePractice Problems 796\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 15 Overview of Private Wealth Management 803\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 803\u003c\/p\u003e \u003cp\u003e1. Introduction 803\u003c\/p\u003e \u003cp\u003e2. Private Clients versus Institutional Clients 804\u003c\/p\u003e \u003cp\u003e2.1. Investment Objectives 804\u003c\/p\u003e \u003cp\u003e2.2. Constraints 805\u003c\/p\u003e \u003cp\u003e2.3. Other Distinctions 806\u003c\/p\u003e \u003cp\u003e3. Understanding Private Clients 807\u003c\/p\u003e \u003cp\u003e3.1. Information Needed in Advising Private Clients 807\u003c\/p\u003e \u003cp\u003e3.2. Client Goals 812\u003c\/p\u003e \u003cp\u003e3.3. Private Client Risk Tolerance 815\u003c\/p\u003e \u003cp\u003e3.4. Technical and Soft Skills for Wealth Managers 817\u003c\/p\u003e \u003cp\u003e4. Investment Planning 819\u003c\/p\u003e \u003cp\u003e4.1. Capital Sufficiency Analysis 819\u003c\/p\u003e \u003cp\u003e4.2. Retirement Planning 823\u003c\/p\u003e \u003cp\u003e5. Investment Policy Statement 827\u003c\/p\u003e \u003cp\u003e5.1. Parts of the Investment Policy Statement 827\u003c\/p\u003e \u003cp\u003e5.2. Sample Investment Policy Statement for a Private Client 833\u003c\/p\u003e \u003cp\u003e6. Portfolio Construction and Monitoring 838\u003c\/p\u003e \u003cp\u003e6.1. Portfolio Allocation and Investments for Private Wealth Clients 838\u003c\/p\u003e \u003cp\u003e6.2. Portfolio Reporting and Review 842\u003c\/p\u003e \u003cp\u003e6.3. Evaluating the Success of an Investment Program 845\u003c\/p\u003e \u003cp\u003e7. Ethical and Compliance Considerations in Private Wealth Management 848\u003c\/p\u003e \u003cp\u003e7.1. Ethical Considerations 848\u003c\/p\u003e \u003cp\u003e7.2. Compliance Considerations 849\u003c\/p\u003e \u003cp\u003e8. Private Client Segments 850\u003c\/p\u003e \u003cp\u003e8.1. Mass Affluent Segment 851\u003c\/p\u003e \u003cp\u003e8.2. High-Net-Worth Segment 851\u003c\/p\u003e \u003cp\u003e8.3. Ultra-High-Net-Worth Segment 851\u003c\/p\u003e \u003cp\u003e8.4. Robo-Advisors 852\u003c\/p\u003e \u003cp\u003eSummary 853\u003c\/p\u003e \u003cp\u003eReferences 854\u003c\/p\u003e \u003cp\u003ePractice Problems 855\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 16 Topics in Private Wealth Management 863\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 863\u003c\/p\u003e \u003cp\u003e1. Introduction 864\u003c\/p\u003e \u003cp\u003e2. General Principles of taxation 866\u003c\/p\u003e \u003cp\u003e2.1. Taxation of the Components of Return 866\u003c\/p\u003e \u003cp\u003e2.2. The Tax Status of the Account 869\u003c\/p\u003e \u003cp\u003e2.3. The Jurisdiction That Applies to the Investor 871\u003c\/p\u003e \u003cp\u003e3. Measuring Tax Efficiency with After-Tax Returns 878\u003c\/p\u003e \u003cp\u003e3.1. Tax Efficiency of Various Asset Classes and Investment Strategies 878\u003c\/p\u003e \u003cp\u003e3.2. Calculating After-Tax Returns 879\u003c\/p\u003e \u003cp\u003e4. Analyzing the Impact of Taxes IN taxable, Tax-Exempt, and Tax-Deferred Accounts 888\u003c\/p\u003e \u003cp\u003e4.1. Capital Accumulation in Taxable, Tax-Deferred, and Tax-Exempt Accounts 889\u003c\/p\u003e \u003cp\u003e4.2. Asset Location 890\u003c\/p\u003e \u003cp\u003e4.3. Decumulation Strategies 894\u003c\/p\u003e \u003cp\u003e4.4. Tax Considerations in Charitable Giving 895\u003c\/p\u003e \u003cp\u003e5. Tax Management Strategies 896\u003c\/p\u003e \u003cp\u003e5.1. Basic Portfolio Tax Management Strategies 897\u003c\/p\u003e \u003cp\u003e5.2. Application of Tax Management Strategies 897\u003c\/p\u003e \u003cp\u003e6. Managing Concentrated Positions 904\u003c\/p\u003e \u003cp\u003e6.1. Risk and Tax Considerations in Managing Concentrated Single-Asset Positions 904\u003c\/p\u003e \u003cp\u003e6.2. Strategies for Managing Concentrated Positions in Public Equities 906\u003c\/p\u003e \u003cp\u003e6.3. Strategies for Managing Concentrated Positions in Privately Owned Businesses 913\u003c\/p\u003e \u003cp\u003e6.4. Strategies for Managing Concentrated Positions in Real Estate 915\u003c\/p\u003e \u003cp\u003e7. Directing and transferring wealth 917\u003c\/p\u003e \u003cp\u003e7.1. Objectives of Gift and Estate Planning 917\u003c\/p\u003e \u003cp\u003e7.2. Gift and Estate Planning Strategies 921\u003c\/p\u003e \u003cp\u003e7.3. Managing Wealth across Generations 933\u003c\/p\u003e \u003cp\u003e8. Summary 940\u003c\/p\u003e \u003cp\u003eReferences 943\u003c\/p\u003e \u003cp\u003ePractice Problems 943\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 17 Portfolio Management for Institutional Investors 949\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 949\u003c\/p\u003e \u003cp\u003e1. Introduction 950\u003c\/p\u003e \u003cp\u003e2. Institutional Investors: Common Characteristics 951\u003c\/p\u003e \u003cp\u003e2.1. Scale 951\u003c\/p\u003e \u003cp\u003e2.2. Long-Term Investment Horizon 952\u003c\/p\u003e \u003cp\u003e2.3. Regulatory Frameworks 952\u003c\/p\u003e \u003cp\u003e2.4. Governance Framework 954\u003c\/p\u003e \u003cp\u003e2.5. Principal–Agent Issues 955\u003c\/p\u003e \u003cp\u003e3. Overview of Investment Policy 955\u003c\/p\u003e \u003cp\u003e4. Pension Funds 958\u003c\/p\u003e \u003cp\u003e4.1. Stakeholders 960\u003c\/p\u003e \u003cp\u003e4.2. Liabilities and Investment Horizon 962\u003c\/p\u003e \u003cp\u003e4.3. Liquidity Needs 966\u003c\/p\u003e \u003cp\u003e4.4. External Constraints Affecting Investment 968\u003c\/p\u003e \u003cp\u003e4.5. Risk Considerations of Private Defined Benefit Pension Plans 970\u003c\/p\u003e \u003cp\u003e4.6. Investment Objectives 974\u003c\/p\u003e \u003cp\u003e4.7. Asset Allocation by Pension Plans 976\u003c\/p\u003e \u003cp\u003e5. Sovereign Wealth Funds 980\u003c\/p\u003e \u003cp\u003e5.1. Stakeholders 981\u003c\/p\u003e \u003cp\u003e5.2. Liabilities and Investment Horizons 982\u003c\/p\u003e \u003cp\u003e5.3. Liquidity Needs 984\u003c\/p\u003e \u003cp\u003e5.4. External Constraints Affecting Investment 985\u003c\/p\u003e \u003cp\u003e5.5. Investment Objectives 986\u003c\/p\u003e \u003cp\u003e5.6. Asset Allocation by Sovereign Wealth Funds 988\u003c\/p\u003e \u003cp\u003e6. University Endowments and Private Foundations 989\u003c\/p\u003e \u003cp\u003e6.1. University Endowments—Stakeholders 991\u003c\/p\u003e \u003cp\u003e6.2. University Endowments—Liabilities and Investment Horizon 992\u003c\/p\u003e \u003cp\u003e6.3. University Endowments—Liquidity Needs 993\u003c\/p\u003e \u003cp\u003e6.4. Private Foundations—Stakeholders 993\u003c\/p\u003e \u003cp\u003e6.5. Private Foundations—Liabilities and Investment Horizon 994\u003c\/p\u003e \u003cp\u003e6.6. Private Foundations—Liquidity Needs 996\u003c\/p\u003e \u003cp\u003e6.7. External Constraints Affecting Investment 997\u003c\/p\u003e \u003cp\u003e6.8. Investment Objectives 998\u003c\/p\u003e \u003cp\u003e6.9. Asset Allocation 1004\u003c\/p\u003e \u003cp\u003e7. Banks and Insurers 1011\u003c\/p\u003e \u003cp\u003e7.1. Banks—Stakeholders 1012\u003c\/p\u003e \u003cp\u003e7.2. Banks—Liabilities and Investment Horizon 1013\u003c\/p\u003e \u003cp\u003e7.3. Banks—Liquidity Needs 1014\u003c\/p\u003e \u003cp\u003e7.4. Insurers—Stakeholders 1014\u003c\/p\u003e \u003cp\u003e7.5. Insurers—Liabilities and Investment Horizon 1016\u003c\/p\u003e \u003cp\u003e7.6. Insurers—Liquidity Needs 1017\u003c\/p\u003e \u003cp\u003e7.7. External Constraints Affecting Investment 1018\u003c\/p\u003e \u003cp\u003e7.8. Investment Objectives 1020\u003c\/p\u003e \u003cp\u003e7.9. Banks and Insurers—Balance Sheet Management and Investment Considerations 1024\u003c\/p\u003e \u003cp\u003eSummary 1042\u003c\/p\u003e \u003cp\u003eReferences 1044\u003c\/p\u003e \u003cp\u003ePractice Problems 1045\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 18 Trade Strategy and Execution 1053\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 1053\u003c\/p\u003e \u003cp\u003e1. Introduction 1053\u003c\/p\u003e \u003cp\u003e2. Motivations to Trade 1054\u003c\/p\u003e \u003cp\u003e2.1. Profit Seeking 1054\u003c\/p\u003e \u003cp\u003e2.2. Risk Management\/Hedging Needs 1056\u003c\/p\u003e \u003cp\u003e2.3. Cash Flow Needs 1057\u003c\/p\u003e \u003cp\u003e2.4. Corporate Actions\/Index Reconstitutions\/Margin Calls 1058\u003c\/p\u003e \u003cp\u003e3. Trading Strategies and Strategy Selection 1060\u003c\/p\u003e \u003cp\u003e3.1. Trade Strategy Inputs 1060\u003c\/p\u003e \u003cp\u003e3.2. Reference Prices 1065\u003c\/p\u003e \u003cp\u003e3.3. Trade Strategies 1068\u003c\/p\u003e \u003cp\u003e4. Trade Execution (Strategy Implementation) 1074\u003c\/p\u003e \u003cp\u003e4.1. Trade Implementation Choices 1074\u003c\/p\u003e \u003cp\u003e4.2. Algorithmic Trading 1077\u003c\/p\u003e \u003cp\u003e4.3. Comparison of Markets 1083\u003c\/p\u003e \u003cp\u003e5. Trade Evaluation 1087\u003c\/p\u003e \u003cp\u003e5.1. Trade Cost Measurement 1087\u003c\/p\u003e \u003cp\u003e5.2. Evaluating Trade Execution 1095\u003c\/p\u003e \u003cp\u003e6. Trade Governance 1102\u003c\/p\u003e \u003cp\u003e6.1. Meaning of Best Order Execution within the Relevant Regulatory Framework 1103\u003c\/p\u003e \u003cp\u003e6.2. Factors Used to Determine the Optimal Order Execution Approach 1103\u003c\/p\u003e \u003cp\u003e6.3. List of Eligible Brokers and Execution Venues 1105\u003c\/p\u003e \u003cp\u003e6.4. Process Used to Monitor Execution Arrangements 1106\u003c\/p\u003e \u003cp\u003e7. Summary 1108\u003c\/p\u003e \u003cp\u003ePractice Problems 1110\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 19 Portfolio Performance Evaluation 1121\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 1121\u003c\/p\u003e \u003cp\u003e1. Introduction 1122\u003c\/p\u003e \u003cp\u003e2. The Components of Performance Evaluation 1122\u003c\/p\u003e \u003cp\u003e3. Performance Attribution 1124\u003c\/p\u003e \u003cp\u003e3.1. Approaches to Return Attribution 1127\u003c\/p\u003e \u003cp\u003e3.2. Risk Attribution 1144\u003c\/p\u003e \u003cp\u003e3.3. Return Attribution Analysis at Multiple Levels 1146\u003c\/p\u003e \u003cp\u003e4. Benchmarking Investments and Managers 1153\u003c\/p\u003e \u003cp\u003e4.1. Asset-Based Benchmarks 1155\u003c\/p\u003e \u003cp\u003e4.2. Properties of a Valid Benchmark 1157\u003c\/p\u003e \u003cp\u003e4.3. Evaluating Benchmark Quality: Analysis Based on a Decomposition of Portfolio Holdings and Returns 1160\u003c\/p\u003e \u003cp\u003e4.4. Benchmarking Alternative Investments 1162\u003c\/p\u003e \u003cp\u003e4.5. Importance of Choosing the Correct Benchmark 1166\u003c\/p\u003e \u003cp\u003e5. Performance Appraisal 1167\u003c\/p\u003e \u003cp\u003e5.1. Distinguishing Investment Skill from Luck 1167\u003c\/p\u003e \u003cp\u003e5.2. Appraisal Measures 1168\u003c\/p\u003e \u003cp\u003e5.3. Evaluation of Investment Manager Skill 1183\u003c\/p\u003e \u003cp\u003eSummary 1187\u003c\/p\u003e \u003cp\u003eReferences 1188\u003c\/p\u003e \u003cp\u003ePractice Problems 1189\u003c\/p\u003e \u003cp\u003e\u003cb\u003eChapter 20 Investment Manager Selection 1193\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003eLearning Outcomes 1193\u003c\/p\u003e \u003cp\u003e1. Introduction 1193\u003c\/p\u003e \u003cp\u003e2. A Framework for Investment Manager Search and Selection 1194\u003c\/p\u003e \u003cp\u003e2.1. Defining the Manager Universe 1196\u003c\/p\u003e \u003cp\u003e2.2. Type I and Type II Errors in Manager Selection 1197\u003c\/p\u003e \u003cp\u003e3. Quantitative Elements of Manager Search and Selection 1200\u003c\/p\u003e \u003cp\u003e3.1. Style Analysis 1200\u003c\/p\u003e \u003cp\u003e3.2. Capture Ratios and Drawdowns in Manager Evaluation 1203\u003c\/p\u003e \u003cp\u003e4. Qualitative Elements of Manager Due Diligence 1207\u003c\/p\u003e \u003cp\u003e4.1. Investment Philosophy 1207\u003c\/p\u003e \u003cp\u003e4.2. Investment Personnel 1211\u003c\/p\u003e \u003cp\u003e4.3. Investment Decision-Making Process 1211\u003c\/p\u003e \u003cp\u003e4.4. Operational Due Diligence 1213\u003c\/p\u003e \u003cp\u003e5. Summary 1226\u003c\/p\u003e \u003cp\u003eReferences 1228\u003c\/p\u003e \u003cp\u003ePractice Problems 1220\u003c\/p\u003e \u003cp\u003eGlossary 1243\u003c\/p\u003e \u003cp\u003eAbout the Authors 1257\u003c\/p\u003e \u003cp\u003eAbout the CFA Program 1259\u003c\/p\u003e \u003cp\u003eIndex 1261\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default Title","offer_id":49407135252823,"sku":"9781119743699","price":80.75,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1739\/5799\/files\/9781119743699.jpg?v=1730498303","url":"https:\/\/bookcurl.com\/products\/portfolio-management-in-practice-volume-1-9781119743699","provider":"Book Curl","version":"1.0","type":"link"}