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Investment Management > Chpatr 13 Equity Portfolio Management Strats > Flashcards

Chpatr 13 Equity Portfolio Management Strats Flashcards

1
Q

The totalactualreturnonanyequityportfoliocanbe

decomposedinto:

A

Expectedreturn

Alpha

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2
Q

Passiveequityportfoliomanagement

A

Long termbuy‐and‐holdstrategy
Usuallytracksanindexovertime
Designed tomatchmarketperformance
Managerisjudgedonhowwelltheytrackthetargetindex

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3
Q

Activeequityportfoliomanagement

A

Attemptstooutperformapassivebenchmarkportfolioonarisk‐adjustedbasisbyseekingthe ‘alpha’value

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4
Q

An Overview of Passive Strategies

Attempttoreplicatetheperformanceofanindex

A

May slightlyunderperformthetargetindexduetofeesand

commissions

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5
Q

Index Portfolio Construction Techniques

Full replication

A

All securitiesintheindexarepurchasedinproportiontoweights
intheindex

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6
Q

Index Portfolio Construction Techniques

Sampling

A

Will have the same beta as the index
Buys arepresentativesampleofstocksinthebenchmarkindex
accordingtotheirweightsinthe index
therewillbesometrackingerror

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7
Q

completenessfunds

A

constructedtocomplementactiveportfoliosthatdonotcover
theentiremarket

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8
Q

The goalofthepassivemanager

A

minimisetheportfolio’sreturnvolatilityrelativetotheindex

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9
Q

Tracking error.

A

Standard deviation of the differential between managed portfolio and index.

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10
Q

Indexfunds

A

thefundmanagerwillreplicatethecompositionofa particular
indexexactly

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11
Q

An Overview of Active Strategies

Practical difficultiesofactivemanager

A

Transactions costsmustbeoffsetbysuperiorperformance
vis‐à‐visthebenchmark
Higher risk‐takingcanalsoincreaseneededperformancetobeatthe
benchmark

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12
Q

Fundamental Strategies:

Three genericthemes

A

Time theequitymarket
Shift fundsamongdifferentequitysectors
Do stockpicking

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13
Q

Fundamental Strategies:

The 130/30Strategy(capitalextension)

A

Long positionsupto130percentoftheportfolio’soriginal
capitalandshortpositionsup to30percent

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14
Q

Technical Strategies:

Contrarian investmentstrategy

A

thebesttimetobuy(sell)astockiswhenthemajorityofother
investorsarethemostbearish(bullish)aboutit.

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15
Q

Technical Strategies:

Pricemomentumstrategy

A

Focus onthetrendofpastpricesaloneandmakespurchaseand
saledecisionsaccordingly

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16
Q

Earningsmomentum

A

Momentum ismeasuredbythedifferenceofactualEPStothe

expectedEPS

17
Q

Momentum investingcanmeantwothings:

A

Price momentum– technicalstrategy

Earningsmomentum– fundamentalstrategy

18
Q

Price momentuminvestor

A

willbeattractedtoasharewithconsistentlystrong,positive
pricereturns

19
Q

Earningmomentuminvestor

A

willbeattractedtosharesofcompanieswhichproduce

earningsinexcessofexpectations

Investment Management (7 decks)

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