Reading 54: Basics of Portfolio Planning and Construction-LO concerning

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Session 12: Portfolio Management
Reading 54: Basics of Portfolio Planning and Construction

LOS b: List and explain the major components of an IPS.

 

 

Brian Nebrik, CFA, meets with a new investment management client. They compose a statement that defines each of their responsibilities concerning this account and choose a benchmark index with which to evaluate the account’s performance. Which of these items should be included in the client’s Investment Policy Statement (IPS)?

A) Both of these items.

B) Neither of these items.

C) Only one of these items.

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Two of the major components of an IPS should be a statement of the responsibilities of the investment manager and the client, and a performance evaluation benchmark.