Unit 3 - Institutional investment framework Flashcards
1
Q
Investment objectives characteristics
A
Clearly stated and fully quantified.
Framed in terms of risk and level of return
2
Q
Practical definition of risk
A
Failure to meet investor’s objective
3
Q
Principal aim of investing institution
A
Meet liabs as they fall due
4
Q
Factors influencing long term investment strategy
A
SOUNDER TRACTORS Size of assets Objectives Uncertainty Nature Diversification Expected long term return Risk appetite
Tax position - of investor and asset Restrictions Accrual of future liabs Currency Term Other funds R - existing Solvency
5
Q
Tactical asset allocation
A
- What extra return available?
- Constraints on changes to portfolio
- Expenses of making switch
- Problems of making large switch - market movements
6
Q
Important thing to consider when picking assets
A
Covariance
