Page 38 - FINAL CFA SLIDES DECEMBER 2018 DAY 12
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Session Unit 12:
43. Basics of Portfolio Planning & Construction
LOS 43.a: Describe the reasons for a written investment policy statement (IPS)., p.174
To help understand the clients investment goals/objectives, circumstances and constraints.
LOS 43.b: Describe the major components of an IPS., p.174
• Description of Client circumstances, situation, and investment objectives.
• Statement of the Purpose of the IPS.
• Statement of Duties and Responsibilities of investment manager, custodian of assets, and the client.
• Procedures to update IPS and to respond to various possible situations.
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• Investment Objectives derived from communications with the client.
• Investment Constraints that must be considered in the plan.
• Guidelines e.g. how the policy will be executed, asset types permitted, and leverage to be used.
• Evaluation of Performance, the benchmark portfolio for evaluating investment performance, and other
information on evaluation of investment results.
• Appendices containing information on strategic (baseline) asset allocation and permitted deviations from
policy portfolio allocations, as well as how and when the portfolio allocations should be rebalanced
