April 2016 - Paper 1 Q7 iv) and vi)

[Nandan]

Hi,

I find that the bookwork on 'investment management' is not so detailed when it comes to the topic on risk budgeting and investment strategies, to be able to answer such questions properly and get the required breadth and depth in the answers. Can anyone please suggest anything useful for reading up related to these topics (chapter 16) and also the thinking behind come up with an answer such as the ones given in the report?

Thanks a lot in advance!

 

[Lindsay Smitherman]

Hi - I will leave it to other students to suggest any additional reading that they might have found useful, but FWIW I don't believe that such reading is required, or indeed is the best use of your study time. It is much more important to be fully on top of (including having robust understanding of) the Core Reading, and to develop your ability to apply the principles to questions and to specific scenarios.

For part (iv), there is sufficient detail in Chapter 16 (Investment management) to allow you to answer this question, including considering the difference between active and passive management. It is important to note that the question is basically asking for two things (key word 'and') and so to make sure that you are covering investment performance monitoring as well as setting the benchmarks. Do bear in mind that the Examiners' Reports solutions are normally some way in excess of full marks, and you don't have to make anywhere near all of the points to score well.

For part (vi), it is important to relate your answer closely to the precise question asked. Think about each of the two proposals in turn, and make sure that you are reflecting the specifics of this particular company (eg its current solvency position). Think about what you know from the course about investment strategy and try to use these in your answer: eg what about implications for asset-liability matching and for diversification?

 

[Nandan]

Hi - I will leave it to other students to suggest any additional reading that they might have found useful, but FWIW I don't believe that such reading is required, or indeed is the best use of your study time. It is much more important to be fully on top of (including having robust understanding of) the Core Reading, and to develop your ability to apply the principles to questions and to specific scenarios.

For part (iv), there is sufficient detail in Chapter 16 (Investment management) to allow you to answer this question, including considering the difference between active and passive management. It is important to note that the question is basically asking for two things (key word 'and') and so to make sure that you are covering investment performance monitoring as well as setting the benchmarks. Do bear in mind that the Examiners' Reports solutions are normally some way in excess of full marks, and you don't have to make anywhere near all of the points to score well.

For part (vi), it is important to relate your answer closely to the precise question asked. Think about each of the two proposals in turn, and make sure that you are reflecting the specifics of this particular company (eg its current solvency position). Think about what you know from the course about investment strategy and try to use these in your answer: eg what about implications for asset-liability matching and for diversification?

Hey! Thank you so much for this clarification! Sometimes, I just get scared looking at the report questioning how exactly am I supposed to think about such points! The chain of thought you suggested helps indeed, thanks!