Study Notes for CFA® Level III 2025 – Portfolio Construction – offered by AnalystPrep

Study Notes for CFA® Level III 2025 – Portfolio Construction – offered by AnalystPrep

Learning Module 1: Overview of Equity Portfolio Management

Los 1(a): Describe the roles of equities in the overall portfolio

Los 1(b): Describe how an equity manager’s investment universe can be segmented

Los 1(c): Describe the types of income and costs associated with owning and managing an equity portfolio and their potential effects on portfolio performance

Los 1(d): Describe the potential benefits of shareholder engagement and the role an equity manager might play in shareholder engagement

Los 1(e): Describe rationales for equity investment across the passive–active spectrum

Learning Module 2: Overview of Fixed-Income Portfolio Management

Los 2(a): Discuss roles of fixed-income securities in portfolios and how fixed-income mandates may be classified

Los 2(b): Describe fixed-income portfolio measures of risk and return as well as correlation characteristics

Los 2(c): Describe bond market liquidity, including the differences among market sub-sectors, and discuss the effect of liquidity on fixed-income portfolio management

Los 2(d): Describe and interpret a model for fixed-income returns

Los 2(e): Discuss the use of leverage, alternative methods for leveraging, and risks that leverage creates in fixed-income portfolios

Los 2(f): Discuss differences in managing fixed-income portfolios for taxable and tax-exempt investors

Learning Module 3: Asset Allocation to Alternative Investments

Los 3(a): Explain the roles that alternative investments play in multi-asset portfolios

Los 3(b): Compare alternative investments and bonds as risk mitigators in relation to a long equity position

Los 3(c): Compare traditional and risk-based approaches to defining the investment opportunity set, including alternative investments

Los 3(d): Discuss investment considerations that are important in allocating to different types of alternative investments

Los 3(e): Discuss suitability considerations in allocating to alternative investments

Los 3(f): Discuss approaches to asset allocation to alternative investments

Los 3(g): Discuss the importance of liquidity planning in allocating to alternative investments

Los 3(h): Discuss considerations in monitoring alternative investment programs

Learning Module 4: An Overview of Private Wealth Management

Los 4(a): Contrast private client and institutional client investment concerns

Los 4(b): Discuss information needed in advising private clients

Los 4(c): Identify tax considerations affecting a private client's investments

Los 4(d): Identify and formulate client goals based on client information

Los 4(e): Evaluate a private client's risk tolerance

Los 4(f): Describe technical and soft skills needed in advising private clients

Los 4(g): Evaluate capital sufficiency in relation to client goals

Los 4(h): Discuss the principles of retirement planning

Los 4(i): Discuss the parts of an investment policy statement (IPS) for a private client

Los 4(j): Prepare the investment objectives section of an IPS for a private client

Los 4(k): Recommend and justify portfolio allocations and investments for a private client

Los 4(l): Evaluate and recommend improvements to an IPS for a private client

Los 4(m): Describe effective practices in portfolio reporting and review

Los 4(n): Evaluate the success of an investment program for a private client

Los 4(o): Discuss ethical and compliance considerations in advising private clients

Los 4(p): Discuss how levels of service and range of solutions are related to different private clients

Learning Module 5: Portfolio Management for Institutional Investors

Los 5(a): Discuss common characteristics of institutional investors as a group

Los 5(b): Discuss investment policy of institutional investors

Los 5(c): Discuss the stakeholders in the portfolio, the liabilities, the investment time horizons, and the liquidity needs of different types of institutional investors

Los 5(d): Describe the focus of legal, regulatory, and tax constraints affecting different types of institutional investors

Los 5(e): Evaluate risk considerations of private defined benefit (DB) pension plans in relation to 1) plan funded status, 2) sponsor financial strength, 3) interactions between the sponsor’s business and the fund’s investments, 4) plan design, and 5) workforce characteristics

Los 5(f): Evaluate the investment policy statement of an institutional investor

Los 5(g): Prepare the investment objectives section of an institutional investor’s investment policy statement

Los 5(h): Evaluate the investment portfolio of a private DB plan, sovereign wealth fund, university endowment, and private foundation

Los 5(i): Describe considerations affecting the balance sheet management of banks and insurers

Learning Module 6: Trading Costs and Electronic Markets

Los 6(a): Explain the components of execution costs, including explicit and implicit costs

Los 6(b): Calculate and interpret effective spreads and VWAP transaction cost estimates

Los 6(c): Describe the implementation shortfall approach to transaction cost measurement

Los 6(d): Describe factors driving the development of electronic trading systems

Los 6(e): Describe market fragmentation

Los 6(f): Distinguish among types of electronic traders

Los 6(g): Describe characteristics and uses of electronic trading systems

Los 6(h): Describes the comparative advantages of low-latency traders

Los 6(i): Describe the risks associated with electronic trading and how regulators mitigate them

Los 6(j): Describes abusive trading practices that real-time surveillance of markets may detect

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    Daniel Glyn
    Daniel Glyn
    2021-03-24
    I have finished my FRM1 thanks to AnalystPrep. And now using AnalystPrep for my FRM2 preparation. Professor Forjan is brilliant. He gives such good explanations and analogies. And more than anything makes learning fun. A big thank you to Analystprep and Professor Forjan. 5 stars all the way!
    michael walshe
    michael walshe
    2021-03-18
    Professor James' videos are excellent for understanding the underlying theories behind financial engineering / financial analysis. The AnalystPrep videos were better than any of the others that I searched through on YouTube for providing a clear explanation of some concepts, such as Portfolio theory, CAPM, and Arbitrage Pricing theory. Watching these cleared up many of the unclarities I had in my head. Highly recommended.
    Nyka Smith
    Nyka Smith
    2021-02-18
    Every concept is very well explained by Nilay Arun. kudos to you man!
    Badr Moubile
    Badr Moubile
    2021-02-13
    Very helpfull!
    Agustin Olcese
    Agustin Olcese
    2021-01-27
    Excellent explantions, very clear!
    Jaak Jay
    Jaak Jay
    2021-01-14
    Awesome content, kudos to Prof.James Frojan
    sindhushree reddy
    sindhushree reddy
    2021-01-07
    Crisp and short ppt of Frm chapters and great explanation with examples.