IBBC CAPITAL ACADEMY / 2027
Investment management as a continuing process
Independent IBBC Capital draft content for self-study. Not affiliated with or endorsed by CFA Institute. New lessons await subject-matter review. No CFA designation or official PSM credit is awarded.
Learning goals
- Explain portfolio perspective using mechanisms and limitations.
- Explain investor and vehicle using mechanisms and limitations.
- Explain execution and review using mechanisms and limitations.
Draft · approximately 25 minutes, excluding further revision.
Portfolio perspective
Evaluate an investment by its contribution to the whole portfolio, including existing risks and client liabilities; attractive standalone returns do not ensure a useful allocation.
Planning identifies objectives and constraints, execution selects and implements exposures, and feedback monitors results and revises the plan as circumstances change.
Investor and vehicle
Individuals, insurers, endowments and pensions differ in liabilities, horizon, taxes and liquidity; institutional status alone does not determine high risk capacity.
Defined-benefit plans promise a formula-based benefit and expose the sponsor to funding risk; defined-contribution balances depend on contributions and investment outcomes.
Execution and review
Mutual funds, ETFs and closed-end funds differ in dealing, creation/redemption and potential premiums to NAV; pooling does not guarantee liquidity or positive returns.
Active and passive managers, custodians and distributors perform different functions; fee incentives, operational roles and fiduciary responsibilities should be made explicit.
Formula and assumptions
Funding ratio=plan assets/present value of benefit obligations
Original applied case: Investment management as a continuing process
- A plan has projected liabilities valued 120 and assets 108 under consistent valuation assumptions.
- Funding ratio=108/120=90%; the shortfall is 12.
- Changing asset risk does not itself eliminate the promised obligation; review sponsor capacity and contribution policy.
Errors to catch
- Do not assume: Standalone return alone determines portfolio suitability.
- Do not assume: Portfolio management ends after the first trade.
- Do not assume: Every institution has identical liquidity needs.
Original knowledge check
Answer every question before checking. Review explanations after submitting; retry starts a new attempt.
Sources and coverage status
These original lessons are drafts. Public outlines are used to check scope; the official learning-outcome text and proprietary question banks are not reproduced here. Follow the source for exam-year requirements and updates.