Study Notes for CFA® Level III 2025 – Portfolio Management Pathway Content – offered by AnalystPrep

Study Notes for CFA® Level III 2025 – Portfolio Management Pathway Content – offered by AnalystPrep

Learning Module 1: Index-Based Equity Strategies

Los 1(a): Compare factor-based strategies to market-capitalization-weighted indexing

Los 1(b): Compare different approaches to index-based equity strategies

Los 1(c): Compare different approaches to index-based equity investing

Los 1(d): Compare the full replication, stratified sampling, and optimization approaches for the construction of index-based equity portfolios

Los 1(e): Discuss potential causes of tracking error and methods to control tracking error for index-based equity portfolios

Los 1(f): Explain sources of return and risk to an index-based equity portfolio

Learning Module 2: Active Equity Investing: Strategies

Los 2(a): Compare fundamental and quantitative approaches to active management

Los 2(b): Analyze bottom-up active strategies, including their rationale and associated processes

Los 2(c): Analyze top-down active strategies, including their rationale and associated processes

Los 2(d): Analyze factor-based active strategies, including their rationale and associated processes

Los 2(e): Analyze factor-based active strategies, including their rationale and associated processes

Los 2(f): Analyze factor-based active strategies, including their rationale and associated processes

Los 2(g): Analyze activist strategies, including their rationale and associated processes

Los 2(h): Describe active strategies based on statistical arbitrage and market microstructure

Los 2(i): Describe how fundamental active investment strategies are created

Los 2(j): Describe how quantitative active investment strategies are created

Los 2(k): Discuss equity investment style classifications

Learning Module 3: Active Equity Investing: Portfolio Construction

Los 3(a): Describe elements of a manager’s investment philosophy that influence the portfolio construction process

Los 3(b): Discuss approaches for constructing actively managed equity portfolios

Los 3(c): Discuss approaches for constructing actively managed equity portfolios

Los 3(d): Discuss the application of risk budgeting concepts in portfolio construction. Distinguish between Active Share and active risk and discuss how each measure relates to a manager’s investment strategy

Los 3(e): Discuss the application of risk budgeting concepts in portfolio construction

Los 3(f): Discuss risk measures that are incorporated in equity portfolio construction and describe how limits set on these measures affect portfolio construction

Los 3(g): Discuss the application of risk budgeting concepts in portfolio construction. Discuss risk measures that are incorporated in equity portfolio construction and describe how limits set on these measures affect portfolio construction

Los 3(h): Discuss the application of risk budgeting concepts in portfolio construction. Discuss risk measures that are incorporated in equity portfolio construction and describe how limits set on these measures affect portfolio construction

Los 3(i): Discuss how assets under management, position size, market liquidity, and portfolio turnover affect equity portfolio construction decisions

Los 3(j): Evaluate the efficiency of a portfolio structure given its investment mandate

Los 3(k): Discuss the long-only, long extension, long/short, and equitized market-neutral approaches to equity portfolio construction, including their risks, costs, and effects on potential alphas

Learning Module 4: Liability-Driven and Index-Based Fixed Income Strategies

Los 4(a): Evaluate strategies for managing a single liability

Los 4(b): Compare strategies for a single liability and for multiple liabilities, including alternative means of implementation. evaluate liability-based strategies under various interest rate scenarios and select a strategy to achieve a portfolio’s objectives

Los 4(c): Evaluate liability-based strategies under various interest rate scenarios and select a strategy to achieve a portfolio’s objectives

Los 4(d): Explain risks associated with managing a portfolio against a liability structure

Los 4(e): Discuss bond indexes and the challenges of managing a fixed-income portfolio to mimic the characteristics of a bond index

Los 4(f): Compare alternative methods for establishing bond market exposure passively

Los 4(g): Discuss criteria for selecting a benchmark and justify the selection of a benchmark

Learning Module 5: Fixed-Income Active Management: Yield Curve Strategies

Los 5(a): Describe the factors affecting fixed-income portfolio returns due to a change in benchmark yields

Los 5(b): Formulate a portfolio positioning strategy given forward interest rates and an interest rate view that coincides with the market view

Los 5(c): Formulate a portfolio positioning strategy given forward interest rates and an interest rate view that diverges from the market view in terms of rate level, slope, and shape

Los 5(d): Formulate a portfolio positioning strategy based upon expected changes in interest rate volatility

Los 5(e): Evaluate a portfolio’s sensitivity using key rate durations of the portfolio and its benchmark

Learning Module 6: Fixed-Income Active Management: Credit Strategies

Los 6(a): Discuss bottom-up approaches to credit strategies

Los 6(b): Discuss the advantages and disadvantages of credit spread measures for spread-based fixed-income portfolios, and explain why option-adjusted spread is considered the most appropriate measure

Los 6(c): Discuss top-down approaches to credit strategies

Los 6(d): Discuss liquidity risk in credit markets and how liquidity risk can be managed in a credit portfolio

Los 6(e): Describe how to assess and manage tail risk in credit portfolios

Los 6(f): Discuss the use of credit default swap strategies in active fixed-income portfolio management

Los 6(g): Discuss various portfolio positioning strategies that managers can use to implement a specific credit spread view

Los 6(h): Discuss considerations in constructing and managing portfolios across international credit markets

Los 6(i): Describe the use of structured financial instruments as an alternative to corporate bonds in credit portfolios

Learning Module 7: Case Study in Portfolio Management: Institutional

Los 7(a): Discuss tools for managing portfolio liquidity risk

Los 7(b): Discuss capture of the illiquidity premium as a long-term investment strategy

Los 7(c): Analyze asset allocation and portfolio construction in relation to liquidity needs and risk and return requirements and recommend actions to address identified needs

Los 7(d): Demonstrate the application of the Code of Ethics and Standards of Professional Conduct regarding the actions of individuals involved in manager selection

Los 7(e): Analyze the costs and benefits of derivatives versus cash market techniques for establishing or modifying asset class or risk exposures

Los 7(f): Demonstrate the use of derivatives overlays in tactical asset allocation and rebalancing

Learning Module 8: Trade Strategy and Execution

Los 8(a): Discuss motivations to trade and how they relate to trading strategy

Los 8(b): Discuss inputs to the selection of a trading strategy

Los 8(c): Compare benchmarks for trade execution

Los 8(d): Recommend and justify a trading strategy (given relevant facts)

Los 8(e): Describe factors that typically determine the selection of a trading algorithm class

Los 8(f): Contrast key characteristics of the following markets in relation to trade implementation: equity, fixed income, options and futures, OTC derivatives, and spot currency

Los 8(g): Explain how trade costs are measured and determine the cost of a trade

Los 8(h): Evaluate the execution of a trade

Los 8(i): Evaluate a firm's trading procedures, including processes, disclosures, and record-keeping with respect to good governance

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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!
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    2021-03-18
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    2021-02-18
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    2021-02-13
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    2021-01-27
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    2021-01-14
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    sindhushree reddy
    2021-01-07
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