Inappropriate capital market expectations could be devastating to portfolio performance. Several pitfalls could lead to false expectations and a less-than-optimal asset allocation. Regardless, the analyst is tasked with following a disciplined process and understanding potential challenges in developing capital market…

Capital market expectations involve setting likely risk and return parameters for a portfolio. These expectations inform the asset allocation that is ultimately selected, which is the investment results’ primary driver. Macro expectations involve forecasting risk and returns for an entire…

Learning Module 1: The Private Wealth Management Industry Los 1(a): Discuss the typical business models of private wealth management service providers and their segment-based strategies Los 1(b): Discuss typical fee, revenue, and compensation structures prevalent in the private wealth management…

Accumulation and Spending of Resources Managing wealth involves the strategic accumulation and spending of resources. Some families operate within a single country, using a single currency, while others have a more global footprint, with assets spread across various jurisdictions and…

Inflation and its Impact on Wealth Inflation, a significant long-term risk, can erode the purchasing power of investors and families. It’s a critical factor for wealth managers to consider as it can increase the nominal value of implicit liabilities or…

Strategies for Risk Management Wealth managers employ a range of strategies to manage the risks their clients may encounter. These strategies can encompass advising clients to mitigate, avoid, transfer, or retain risks. Despite the low probability of occurrence, the potential…

Risk Management Risk management is a vital process in finance, focusing on identifying potential threats to assets, including human capital, and devising strategies to mitigate these risks. The process comprises five key components: Monitor, Identify, Respond (Mitigate, Avoid, Transfer, Retain),…

Entrepreneurship and Wealth Creation Entrepreneurship plays a pivotal role in wealth creation. A study by Altrata, a global wealth management firm, reveals that a significant majority of the ultra-high-net-worth individuals have amassed their wealth through entrepreneurship. The statistics are as…

Unexpected alterations in the level, slope, and shape of the yield curve, as well as currency fluctuations, can significantly affect a portfolio’s value. For instance, a sudden steepening of the yield curve or a sharp depreciation of the domestic currency…

Investing Across Borders Investing across borders is a strategy employed by portfolio managers to diversify their portfolio and maximize returns. This involves managing currency risk, either actively or passively. For instance, a US-based portfolio manager might invest in Japanese bonds…