Chapter 11 Flashcards
A ____ portfolio is one that invests in both equity and debt securities
Balanced
A ____ program provides a series of portfolios with multiple investment funds to reflect pre-selected asset allocation models
Fund Wrap
____ are mutual funds or segregated funds that invest in units of other mutuals funds or segregated funds.
Fund of Funds
____ 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.
Portfolio allocation services
____ purchases units of a portfolio based on when the assets will be required.
Target date portfolio
____ retain the title of individual securities
Managed Accounts
____ require the clients consent to trade
Non-discretionary managed accounts
____ are programs in which the decision making power is delegated to the broker or manager.
Discetionary managed accounts
____ or ____ provide fee based management while allowing the investor to retain title to individual securities.
Separate managed accounts or segregated accounts
Which type of account has the following characteristics?
- Accessible to smaller accounts
- Professional asset mix design
- Automatic rebalancing
- Diversification
Balanced Funds
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
Fund Wraps
Which type of account has the following characteristics?
- Potentially lower fees
- Highly customizable
- Tax management benefits
Managed Accounts
The best use of asset mix is referred to as selecting portfolios of the ____
Efficient Frontier
An advisor may take a more active role in a asset allocation for portfolio solutions for 4 reasons
- When a portfolio solution is only part of the portfolio
- When predetermined asset mixes will not do (because they don’t match the constrainst of the client)
- When portfolio solutions contain objectionable assets
- When portfolio solutions do not offer tactical asset allocation
What are two portfolio fee structures?
- Embedded Fee
2. Unbundled Fee
____ 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.
Peer group comparisons
A ____ is a combination of indices that sets a realistic, attainable performance standard for the portfolio.
blended benchmark
Should you use pre-tax or post-tax returns in measuring performances?
Pre-tax
_____ are essentially software tools and data feeds that eliminate the shortcomings associated with separately managed accounts
Unified Managed Accounts (UMAs)
____ apply to a whole household and provide the features of a Unified Managed Account.
Unified Managed Household Accounts (UMHAs)
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?
Pre-tax, gross of fees.
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?
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.
Name 2 types of fund wraps
Fund of funds
Portfolio allocation services
___ are mutual funds or segregated funds that invest in units of other mutual funds or segregated funds
Fund of funds
