Part 9 - Current And Integrated Topics

Question 1

Asset Owners, Investment Management and Commitment

“Building Blocks of Investment Management - factors for effective decision making”

Answer 1

• Knowledge Management
• Organisational Culture
• Governance
• Capabilities and resources
• Market and non market relationships

Question 2

Asset Owners, Investment Management and Commitment

“Six Performance and Commitment Metrics for organisations”

Answer 2

1 - Risk Adjusted Rate of Return
2 - Commitment of staff to organisation’s long term mission
3 - Risk adjusted rate of return of the unit investment team
4 - Human capital
5 - Direct and indirect costs of investment department
6 - Quality and continuity of investment partners and deal access

Question 3

Characteristics of Effective Metrics

Answer 3

1 - Consistent
2 - Relevant to function and task
3 - Transparent and parsimonious 
4 - Few in number
5 - Flexible and adaptive

Question 4

Limitations of Cash Flow Matching Commitment Strategy

Answer 4

• lead to volatile patterns over time
• skipping commitments for multiple periods
• NAV as percentage of the overall portfolio is independent of the strategy
• Not possible for new PE programmes