Investment Strategy and Management

Question 1

Factors Affecting Investment Strategy

Answer 1

UNSORTED CARROTS

Uncertainty of Liabilities
Nature of the Liabilities
Size of Assets (absolute or relative)
Objectives
Return (long-term expected)
Tax treatment of investor or asset
Existing portfolio/assets held
Diversification 

Currency of existing liabilities or of income needed
Accrual of liabilities in the future
Restrictions - regulator(statutory)/legal/voluntary
Risk Appetite
Other fund’s strategy (competition)
Term of existing liabilities
Solvency Requirements

Question 2

Regulatory Influences on Assets Held

Answer 2

TECH SCAM

Types of assets can invest in
Extent of mismatching allowed
Currency match assets and liabilities
Hold certain assets

Single counterparty maximum exposure
Custodianship of assets
Amount of any one asset used to demonstrate solvency
Mismatching reserve