{"id":29014,"date":"2023-02-09T13:58:10","date_gmt":"2023-02-09T13:58:10","guid":{"rendered":"https:\/\/analystprep.com\/study-notes\/?p=29014"},"modified":"2023-06-26T13:18:05","modified_gmt":"2023-06-26T13:18:05","slug":"study-notes-for-cfa-level-iii-asset-allocation-offered-by-analystprep","status":"publish","type":"post","link":"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/study-notes-for-cfa-level-iii-asset-allocation-offered-by-analystprep\/","title":{"rendered":"Study Notes for CFA\u00ae Level III \u2013 Asset Allocation \u2013 offered by AnalystPrep"},"content":{"rendered":"<h2>Reading 5: Overview of Asset Allocation<\/h2>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/investment-governance\/\" target=\"_blank\" rel=\"noopener\">-a. Describe elements of effective investment governance and investment governance considerations in asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/economic-balance-sheet\/\" target=\"_blank\" rel=\"noopener\">-b. Describe elements of effective investment governance and investment governance considerations in asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/approaches-to-asset-allocation-2\/\" target=\"_blank\" rel=\"noopener\">-c. Compare the investment objectives of asset-only, liability-relative, and goals-based asset allocation approaches;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/approaches-to-asset-allocation\/\" target=\"_blank\" rel=\"noopener\">-d. Contrast concepts of risk relevant to asset-only, liability-relative, and goals-based asset allocation approaches; <\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/asset-class-allocation\/\" target=\"_blank\" rel=\"noopener\">-e. Explain how asset classes are used to represent exposures to systematic risk and discuss criteria for asset class specification;<\/a><\/em><\/p>\n<p><em>-f. Explain the use of risk factors in asset allocation and their relation to traditional asset class\u2013based approaches;<\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/strategic-asset-allocation\/\" target=\"_blank\" rel=\"noopener\">-g. Select and justify an asset allocation based on an investor\u2019s objectives and constraints;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/the-global-market-portfolio-gmp\/\" target=\"_blank\" rel=\"noopener\">-h. Describe the use of the global market portfolio as a baseline portfolio in asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/strategic-implementation-choices\/\" target=\"_blank\" rel=\"noopener\">-i. Discuss strategic implementation choices in asset allocation, including passive\/active choices and vehicles for implementing passive and active mandates;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/rebalancing-asset-portfolios\/\" target=\"_blank\" rel=\"noopener\">-j. Discuss strategic considerations in rebalancing asset allocations;<\/a><\/em><\/p>\n<h2>Reading 6: Principles of Asset Allocation<\/h2>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/mean-variance-optimization-an-overview\/\" target=\"_blank\" rel=\"noopener\">-a. Describe and critique the use of mean\u2013variance optimization in asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/addressing-criticisms-of-and-using-mvo-2\/\" target=\"_blank\" rel=\"noopener\">-b. Recommend and justify an asset allocation using mean\u2013variance optimization;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/asset-allocation-relative-to-an-investors-economic-balance-sheet\/\" target=\"_blank\" rel=\"noopener\">-c. Interpret and critique an asset allocation in relation to an investor\u2019s economic balance sheet;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/asset-class-liquidity-considerations\/\" target=\"_blank\" rel=\"noopener\">-d. Discuss asset class liquidity considerations in asset allocationl;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/absolute-and-relative-risk-budgets\/\" target=\"_blank\" rel=\"noopener\">-e. Explain absolute and relative risk budgets and their use in determining and implementing an asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/client-needs-and-preferences-vs-asset-allocation\/\" target=\"_blank\" rel=\"noopener\">-f. Describe how client needs and preferences regarding investment risks can be incorporated into asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/use-of-monte-carlo-simulation-and-scenario-analysis\/\" target=\"_blank\" rel=\"noopener\">-g. Discuss the use of Monte Carlo simulation and scenario analysis to evaluate the robustness of an asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/use-of-investment-factors\/\" target=\"_blank\" rel=\"noopener\">-h. Describe the use of investment factors in constructing and analyzing an asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/addressing-criticisms-of-and-using-mvo\/\" target=\"_blank\" rel=\"noopener\">-i. Recommend and justify an asset allocation based on the global market portfolio;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/characteristics-of-liabilities-relevant-to-asset-allocation\/\" target=\"_blank\" rel=\"noopener\">-j. Describe and evaluate characteristics of liabilities that are relevant to asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/liability-relative-asset-allocation-2\/\" target=\"_blank\" rel=\"noopener\">-k. Discuss approaches to liability-relative asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/liability-relative-asset-allocation-2\/\" target=\"_blank\" rel=\"noopener\">-l. Recommend and justify a liability-relative asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/goals-based-approach\/\" target=\"_blank\" rel=\"noopener\">-m. Recommend and justify an asset allocation using a goals-based approach;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/heuristic-and-other-approaches-to-asset-allocation\/\" target=\"_blank\" rel=\"noopener\">-n. Describe and critique heuristic and other approaches to asset allocation;<\/a><\/em><\/p>\n<p><em><a href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/factors-affecting-rebalancing-policy\/\" target=\"_blank\" rel=\"noopener\">-o. Discuss factors affecting rebalancing policy;<\/a><\/em><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Reading 5: Overview of Asset Allocation -a. Describe elements of effective investment governance and investment governance considerations in asset allocation; -b. Describe elements of effective investment governance and investment governance considerations in asset allocation; -c. Compare the investment objectives of&#8230;<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[571],"tags":[],"class_list":["post-29014","post","type-post","status-publish","format-standard","hentry","category-cfa-level-iii","blog-post","no-post-thumbnail","animate"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Study Notes for CFA\u00ae Level III \u2013 Asset Allocation \u2013 offered by AnalystPrep - CFA, FRM, and Actuarial Exams Study Notes<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/analystprep.com\/study-notes\/cfa-level-iii\/study-notes-for-cfa-level-iii-asset-allocation-offered-by-analystprep\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Study Notes for CFA\u00ae Level III \u2013 Asset Allocation \u2013 offered by AnalystPrep - CFA, FRM, and Actuarial Exams Study Notes\" \/>\n<meta property=\"og:description\" content=\"Reading 5: Overview of Asset Allocation -a. 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