Chapter 11

Question 1

A ____ portfolio is one that invests in both equity and debt securities

Answer 1

Balanced

Question 2

A ____ program provides a series of portfolios with multiple investment funds to reflect pre-selected asset allocation models

Answer 2

Fund Wrap

Question 3

____ are mutual funds or segregated funds that invest in units of other mutuals funds or segregated funds.

Answer 3

Fund of Funds

Question 4

____ allow the investor to select from a series of pre-determined model portfolios. Unlike fund of funds, however, the investor owns units of each underlying fund.

Answer 4

Portfolio allocation services

Question 5

____ purchases units of a portfolio based on when the assets will be required.

Answer 5

Target date portfolio

Question 6

____ retain the title of individual securities

Answer 6

Managed Accounts

Question 7

____ require the clients consent to trade

Answer 7

Non-discretionary managed accounts

Question 8

____ are programs in which the decision making power is delegated to the broker or manager.

Answer 8

Discetionary managed accounts

Question 9

____ or ____ provide fee based management while allowing the investor to retain title to individual securities.

Answer 9

Separate managed accounts or segregated accounts

Question 10

Which type of account has the following characteristics?

• Accessible to smaller accounts
• Professional asset mix design
• Automatic rebalancing
• Diversification

Answer 10

Balanced Funds

Question 11

Which type of account has the following characteristics?

• Accessible to smaller accounts
• Professional asset mix design
• Manager selection and monitoring
• Automatic rebalancing
• Commision or fee-based compensation structures

Answer 11

Fund Wraps

Question 12

Which type of account has the following characteristics?

• Potentially lower fees
• Highly customizable
• Tax management benefits

Answer 12

Managed Accounts

Question 13

The best use of asset mix is referred to as selecting portfolios of the ____

Answer 13

Efficient Frontier

Question 14

An advisor may take a more active role in a asset allocation for portfolio solutions for 4 reasons

Answer 14

1. When a portfolio solution is only part of the portfolio
2. When predetermined asset mixes will not do (because they don’t match the constrainst of the client)
3. When portfolio solutions contain objectionable assets
4. When portfolio solutions do not offer tactical asset allocation

Question 15

What are two portfolio fee structures?

Answer 15

1. Embedded Fee

2. Unbundled Fee

Question 16

____ rank similar portfolios in descending order of returns for a given period to assign a ranking. Quartile rankings (the most commonly used peer group measure) are readily available from a number of sources including Morningstar’s PALTrak, GlobeFund and other databases.

Answer 16

Peer group comparisons

Question 17

A ____ is a combination of indices that sets a realistic, attainable performance standard for the portfolio.

Answer 17

blended benchmark

Question 18

Should you use pre-tax or post-tax returns in measuring performances?

Answer 18

Pre-tax

Question 19

_____ are essentially software tools and data feeds that eliminate the shortcomings associated with separately managed accounts

Answer 19

Unified Managed Accounts (UMAs)

Question 20

____ apply to a whole household and provide the features of a Unified Managed Account.

Answer 20

Unified Managed Household Accounts (UMHAs)

Question 21

A wealth advisor compares a list of returns of fund wrap programs for potential client purchase. For a fair comparison of returns, which type of returns should be used?

Answer 21

Pre-tax, gross of fees.

Question 22

Brent is a manager of a clothing store in downtown Calgary. He is single, in his mid 40’s and of moderate risk tolerance. He has a modest retirement portfolio of $70,000 and has no other assets other than his car. Brent would like to buy into a portfolio solution. Which portfolio solution is Brent most suited to?

Answer 22

Portfolio Allocation Service -

Brent doesn’t meet the account size minimums needed for the other account types. He meets the size requirements for portfolio allocation services.

Question 23

Name 2 types of fund wraps

Answer 23

Fund of funds

Portfolio allocation services

Question 24

___ are mutual funds or segregated funds that invest in units of other mutual funds or segregated funds

Answer 24

Fund of funds