Chapter 15: Advances in Portfolio Construction and Technology

In this section

• Factor-Based Allocation and Smart Beta Approaches
  Factor-Based Allocation and Smart Beta Approaches (CFA Level 1): From Market-Cap Weighting to Factor-Based Strategies, Identifying and Constructing Investment Factors, and Emergence of Smart Beta. Key definitions, formulas, and exam tips.
• Machine Learning and Algorithmic Portfolio Optimization
  Machine Learning and Algorithmic Portfolio Optimization (CFA Level 1): Machine Learning Basics in Finance, Supervised vs. Unsupervised Learning, and Algorithmic Trading and Large Datasets. Key definitions, formulas, and exam tips.
• Data Analytics Tools for Portfolio Monitoring
  Data Analytics Tools for Portfolio Monitoring (CFA Level 1): Range of Data Analytics Platforms for Real-Time Portfolio and Portfolio Analytics: Performance, Attribution, Risk, and Factor Exposures. Key definitions, formulas, and exam tips.
• Behavioral Insights in Quantitative Models
  Behavioral Insights in Quantitative Models (CFA Level 1): Integrating Behavioral Finance into Quantitative Models, Common Behavioral Biases Affecting Models, and Incorporating Sentiment Indicators. Key definitions, formulas, and exam tips.
• Applications of Distributed Ledger in Portfolio Execution
  Applications of Distributed Ledger in Portfolio Execution (CFA Level 1): Key Elements of DLT in Finance, Streamlining Trade Settlement, and How Traditional Settlements Work. Key definitions, formulas, and exam tips.
• Role of Big Data in Security Selection
  Role of Big Data in Security Selection (CFA Level 1): Defining Big Data in Finance, Alternative Data for Security Selection, and Big Data Pipeline. Key definitions, formulas, and exam tips.
• High-Frequency Data Analysis and Real-Time Tracking
  High-Frequency Data Analysis and Real-Time Tracking (CFA Level 1): Distinguishing High-Frequency Data from Aggregated Data and Real-Time Data Feeds and Intraday Decision Making. Key definitions, formulas, and exam tips.
• Natural Language Processing for Market Sentiment
  Natural Language Processing for Market Sentiment (CFA Level 1): NLP Fundamentals in Market Context, Core NLP Methods, and Data Sources for Sentiment Analysis. Key definitions, formulas, and exam tips.
• Automated Rebalancing Algorithms
  Automated Rebalancing Algorithms (CFA Level 1): What Is Automated Rebalancing?, Key Differences from Manual Periodic Rebalancing, and Triggers and Thresholds. Key definitions, formulas, and exam tips.
• Artificial Intelligence in Risk Assessment
  Artificial Intelligence in Risk Assessment (CFA Level 1): Traditional Risk Models vs. AI-Driven Approaches and Leveraging Neural Networks, Deep Learning, and Reinforcement Learning. Key definitions, formulas, and exam tips.
• Building Custom Risk-Factor Indices
  Building Custom Risk-Factor Indices (CFA Level 1): Rationale for Building Custom Risk-Factor Indices, Identifying Relevant Data Sources and Metrics, and Index Construction Process. Key definitions, formulas, and exam tips.
• Cloud-Based Portfolio Management Solutions
  Cloud-Based Portfolio Management Solutions (CFA Level 1): Benefits of On-Demand Resource Scalability and Security Considerations for Cloud-Based Portfolio Management. Key definitions, formulas, and exam tips.
• Quantitative vs. Judgmental Overlays
  Quantitative vs. Judgmental Overlays (CFA Level 1): Defining Quantitative and Judgmental Overlays, Quantitative Overlay, and Judgmental Overlay. Key definitions, formulas, and exam tips.
• Testing and Validating Algorithmic Strategies
  Testing and Validating Algorithmic Strategies (CFA Level 1): Testing and Validation Workflow, Hypothesis Formation, and Data Gathering and Preparation. Key definitions, formulas, and exam tips.
• Advancements in Portfolio Stress Testing
  Advancements in Portfolio Stress Testing (CFA Level 1): Traditional vs Advanced Stress Testing, Multi-Factor Stress Testing and Correlated Shocks, and Scenario Generation Tools. Key definitions, formulas, and exam tips.
• Integration of FinTech Innovations with Regulatory Rules
  Integration of FinTech Innovations with Regulatory Rules (CFA Level 1): Evolving Intersection of FinTech and Regulation and Emerging FinTech Solutions Influencing Portfolio Management. Key definitions, formulas, and exam tips.