The Front Office

Question 1

front office has four main areas of responsibilities

Answer 1

1. Portfolio management
2. Trade execution
3. Sales and marketing
4. Client service

Question 2

The chief investment officer has two primary duties:

Answer 2

• Providing general management of investment management

* Chairperson of the firm’s asset mix committee

Question 3

head of equities and Fixed income have the following key responsibilities

Answer 3

• supervision to the firm’s portfolio managers

* Involved in decisions to change the sector mix or cash weighting

Question 4

What is market depth

Answer 4

The number of shares available at the bid and offer price

Question 5

two types information provided to the institutional investor in the portfolio management report

Answer 5

1. Portfolio accounting information

2. Portfolio management information

Question 6

Portfolio accounting information is provided on a monthly basis and includes the following (3)

Answer 6

• Detailed portfolio holdings
• A report on all security transactions
• An income report

Question 7

Explain what is a dual signature?

Answer 7

all completed security transaction confirmations (“tickets”) be signed by two approved individuals in the portfolio management group

Question 8

Signatories of a Dual signature?

Answer 8

• First signatory is the portfolio manager who
originated the security transaction
• Second is usually either the portfolio manager’s supervisor or another portfolio manager.

Question 9

Process for personal investing activities (3)

Answer 9

• Employee requests written pre-clearance t
• compliance department reviews the firm’s restricted list and decides on permission
• Employee must ask brokerage firm to send trades for the month so can be reviewed by compliance.

Question 10

What is an investment management agreement?

Answer 10

Contract that governs the relationship between an institutional investment manager (the “Advisor”) and its institutional investor client (the “Client”)

Question 11

three basic types of institutional clients

Answer 11

1. Institutional investors (non-mutual fund clients)
2. Mutual fund sponsors
3. Individual investors (high-net-worth clients)

Question 12

three steps in this institutional sales and marketing process (institutional and mutual funds)

Answer 12

1. Creating sales and marketing literature
2. Determining a sales and marketing approach
3. Preparing a presentation to potential investors

Question 13

Four main topics of sales and marketing Literature

Answer 13

• The owners/portfolio managers
• The firm’s investment mandates
• Strategy and investment decision-making process
• Portfolio performance track record

Question 14

two basic sales and marketing approaches for institutional investors

Answer 14

1. Direct contact

2. The use of pension consultants

Question 15

3 best practices for risk control and securities trading procedures

Answer 15

• dual signatures
• employee personal trading policies
• pre-trade compliance tests.

Question 16

main reasons why institutional investment management contracts are terminated

Answer 16

• Weak investment performance (relative to peers)

* Low-quality client service