Segmentation of Equity Investment Universe
Equity Investment Style Box $$ \begin{array}{c|c|ccc} & & & \textbf{Style} & \\ \hline & & \textbf{Value} & \textbf{Blend} & \textbf{Growth} \\ & \textbf{Large} & \text{Large-cap value} & \text{Large-cap blend} & \text{Large-cap growth} \\ \textbf{Size} & \textbf{Mid} & \text{Mid-cap value} &…
Introduction and the Significance of Equities in a Portfolio
Capital Appreciation One of the primary sources of equity return is capital appreciation. This happens when an investor buys a stock and sells it for a higher price, making a profit. Capital appreciation often receives favorable tax treatment in many…
Study Notes for CFA® Level III – Passive Equity Investing – offered by AnalystPrep
Reading 24: Passive Equity Investing Los 24 a: Discuss considerations in choosing a benchmark for a passively managed equity portfolio Los 24 b: Compare passive factor-based strategies to market-capitalization-weighted indexing Los 24 c: Compare different approaches to passive equity investing…
Study Notes for CFA® Level III – Active Equity Investing: Strategies – offered by AnalystPrep
Reading 25: Active Equity Investing: Strategies Los 25 a: Compare fundamental and quantitative approaches to active management Los 25 b: Analyze bottom-up active strategies, including their rationale and associated processes Los 25 c: Analyze top-down active strategies, including their rationale…
Study Notes for CFA® Level III – Active Equity Investing: Portfolio Construction – offered by AnalystPrep
Reading 26: Active Equity Investing: Portfolio Construction Los 26 a: Describe elements of a manager’s investment philosophy that influence the portfolio construction process Los 26 b: Discuss approaches for constructing actively managed equity portfolios Los 26 c: Discuss approaches for…
Study Notes for CFA® Level III – Hedge Fund Strategies – offered by AnalystPrep
Reading 27: Hedge Fund Strategies Los 27 a: Discuss how hedge fund strategies may be classified Los 27 b: Discuss investment characteristics, strategy implementation, and role in a portfolio of equity-related hedge fund strategies Los 27 c: Discuss investment characteristics,…
Long/Short, Long Extension, and Market-Neutral Portfolio Construction
Portfolio managers who have flexibility in their IPS can choose between exclusively buying equities (long-only) or a combination of buying equities and short-selling other equities simultaneously. The Merits of Long-only Investing Long-term risk premium: Achieved solely through net long investments….
The Well-Constructed Portfolio
A well-constructed portfolio aims to provide investors with promised characteristics efficiently, without guaranteeing benchmark-like results. Key elements include: Clearly defined investment process and philosophy. Alignment with investor risk and structural expectations. Implementation of a risk-efficient methodology. Maintenance of low operating…
Implications Involving Cost
Implicit Vs. Explicit Costs Implicit trading costs are also known as opportunity costs and include market impact costs. When a manager sells a significant amount of stock, the increased selling pressure can push down the security's price, resulting in a…
Assessing the Suitable Risk Level
Heuristic Risk Measures Heuristics are practical rules or general practices that come from experience rather than formal scientific analysis. They're not necessarily wrong, but they tend to be simple, one-size-fits-all solutions and may not align perfectly with modern portfolio theory….
