Page 41 - FINAL CFA SLIDES DECEMBER 2018 DAY 12
P. 41

Session Unit 12:
                                                                                            41. Portfolio Risk and Return: Part II


          LOS 43.e: Describe the investment constraints of liquidity, time horizon, tax concerns, legal and regulatory factors,
          and unique circumstances and their implications for the choice of portfolio assets., p.176


           Checklist for addressing the important points of
           portfolio construction in IPS: R-R-T-T-L-L-U.

           •    Risk,
           •    Return,



           Investment Constraints:
                                                         tanties
           •    Time horizon (the longer, the more risk and less liquidity)

           •    Tax situation (different securities have different tax rates)
           •    Liquidity (when and how do you need interest/dividends and principal)

           •    Legal and regulatory restrictions
           •    Unique constraints of a specific investor (e.g. ethical preferences, human rights,

                diversification)
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