Portfolio Management
The primary output of the Planning phase of the Portfolio Management Process, this document contains the investment plan for a client or investor.
INVESTMENT POLICY STATEMENT (IPS)
This investment objective is the most conservative and is primarily intended to minimize risk of capital loss while beating the inflation rate.
CAPITAL PRESERVATION
A portfolio primarily invested in Philippine stocks is best benchmarked relative to the:
A. 10-year Philippine government's Treasury bond
B. PSEi
C. S&P 500
D. All of the above
E. None of the above
B. PSEi
The client plans to have a 1-month vacation in Europe two years from now and would thus need to withdraw 20% of the investment. This will be included and discussed in the ____________ section of the IPS.
A. Time Horizon
B. Liquidity Requirements
C. ESG Considerations
D. Unique Preferences
E. None of the above
B. Liquidity Requirements
This asset allocation approach establishes a long-term mix of assets designed to meet the investor’s objectives.
STRATEGIC ASSET ALLOCATION (SAA)
Investors with this objective seek high rates of return that could make their capital grow exponentially over time.
CAPITAL APPRECIATION
A portfolio primarily invested in U.S. stocks may be benchmarked relative to the:
A. S&P 500
B. Dow Jones Industrial Average
C. Russell 3000 Index
D. All of the above
E. None of the above
D. All of the above
The client would like to allot 20% of their portfolio to stocks of companies that are in the artificial intelligence (AI) space. This will be included and discussed in the ____________ section of the IPS.
A. Time Horizon
B. Liquidity Requirements
C. ESG Considerations
D. Unique Preferences
E. None of the above
D. Unique Preferences
This asset allocation strategy involves making short-term adjustments to asset class or sub-asset class weights to take advantage of short-term market fluctuations, aiming to enhance the portfolio’s overall return.
TACTICAL ASSET ALLOCATION (TAA)
Investors with this investment objective require a regular stream of money that can be withdrawn from their investment to pay for their kids' tuition, housing or car loan, household expense, etc.
CURRENT INCOME
Your client can invest P900,000 today with the hopes of growing this to P2,000,000 after 20 years. What annual rate of return must the investment earn to be able to reach the client's goal? (Assume annual compounding and show two decimal places in your answer.)
4.07%
The client's preference to invest in "green" or environmentally friendly companies is best discussed in the _____________ section of the IPS.
A. Unique Preferences
B. Liquidity Requirements
C. ESG Considerations
D. Regulatory Concerns
E. Investment Restrictions
C. ESG Considerations
This strategy involves adjusting a portfolio's asset allocations to restore them to the target levels specified in the Investment Policy Statement.
REBALANCING or PORTFOLIO REBALANCING
This “growth-with-income” investment objective combines both capital appreciation and current income objectives.
TOTAL RETURN
Your client can invest P900,000 today with the hopes of getting P2,000,000 in today's money after 20 years. Inflation is expected to average 2% every year over the next 20 years. What annual rate of return must the investment earn to be able to reach the client's goal? (Assume annual compounding and show two decimal places in your answer.)
6.16%
(30 seconds) Your client is a Filipino investor with a Moderately Aggressive risk profile and 1-year investment time horizon. The best investments to include in their portfolio are:
A. PSEi Stocks and FXTNs
B. T-bills and Money Market Funds
C. High-yield Peso Savings Accounts and Bitcoin
D. 360-day Peso Time Deposit and U.S. Treasury Notes
E. None of the above
B. T-bills and Money Market Funds
(The liquidity and riskiness of the investment should match the investor's time horizon.)