Chapter 8: Synthesis and Practical Application

In this section

• Integrating Asset Allocation, Behavioral Insights, and Risk Controls
  Integrating Asset Allocation, Behavioral Insights, and Risk Controls (CFA Level 1): Recognizing Behavioral Biases in Asset Allocation, Designing a Holistic Asset Allocation, and Integrating Risk Controls. Key definitions, formulas, and exam tips.
• Constructing Model Portfolios – Practical Case Studies
  Constructing Model Portfolios – Practical Case Studies (CFA Level 1): Proposed Asset Allocation and Rationale. Key definitions, formulas, and exam tips.
• Monitoring, Rebalancing, and Reporting
  Monitoring, Rebalancing, and Reporting (CFA Level 1): Strategic vs. Tactical Rebalancing, Strategic Rebalancing, and Tactical Rebalancing. Key definitions, formulas, and exam tips.
• Ethical Considerations in Daily Portfolio Management
  Ethical Considerations in Daily Portfolio Management (CFA Level 1): Core Principles of Ethical Portfolio Management, Fiduciary Duty, and Conflict of Interest Awareness. Key definitions, formulas, and exam tips.
• Future Directions in Portfolio Management (AI, Big Data, Etc.)
  Future Directions in Portfolio Management (AI, Big Data, Etc.) (CFA Level 1): AI and Machine Learning in Portfolio Management, Supervised vs. Unsupervised Learning, and Potential Pitfalls: Model Overfitting. Key definitions, formulas, and exam tips.
• Real-World Portfolio Simulations and Stress Situations
  Real-World Portfolio Simulations and Stress Situations (CFA Level 1): Why Perform Real-World Simulations?, Key Building Blocks of a Simulation, and Historical Stress Scenarios. Key definitions, formulas, and exam tips.
• Communicating Complex Strategies to Clients
  Communicating Complex Strategies to Clients (CFA Level 1): Translating Jargon into Clear Language, Leveraging Visual Aids, and Linking Strategies to Client Goals. Key definitions, formulas, and exam tips.
• Manager Selection Within Model Portfolios
  Manager Selection Within Model Portfolios (CFA Level 1): Defining the Core Criteria, Track Record and Performance, and Risk-Adjusted Returns. Key definitions, formulas, and exam tips.
• Assessing Out-of-Sample Performance
  Assessing Out-of-Sample Performance (CFA Level 1): Problem of Overfitting, Walk-Forward Testing Approaches, and Rolling Window Analysis. Key definitions, formulas, and exam tips.
• Efficient Portfolio Implementation Techniques
  Efficient Portfolio Implementation Techniques (CFA Level 1): Balancing Position Sizing with Returns and Liquidity, Harnessing Rebalancing Software and Pre-Trade Compliance, and Order Management Systems (OMS). Key definitions, formulas, and exam tips.
• Managing Currency Exposures in Model Portfolios
  Managing Currency Exposures in Model Portfolios (CFA Level 1): Why Currency Exposure Matters, Assessing Foreign Currency Exposure, and Tools and Techniques for Hedging Currency Exposure. Key definitions, formulas, and exam tips.
• Incorporating Thematic or Sector Investments
  Incorporating Thematic or Sector Investments (CFA Level 1): Understanding Thematic and Sector Investments, Identifying Emerging Themes, and Evaluating Sector-Heavy Approaches. Key definitions, formulas, and exam tips.
• Tail Risk Hedging in Practical Applications
  Tail Risk Hedging in Practical Applications (CFA Level 1): Understanding Tail Risk, Mermaid Diagram: Return Distribution and Left Tail, and Common Tail Risk Hedging Tools. Key definitions, formulas, and exam tips.
• Active vs. Passive Implementation in Model Portfolios
  Active vs. Passive Implementation in Model Portfolios (CFA Level 1): Setting the Stage: Active vs. Passive Essentials, Considering Market Efficiency, and Balancing Cost Sensitivity With Alpha Potential. Key definitions, formulas, and exam tips.
• Factors Influencing Execution Quality
  Factors Influencing Execution Quality (CFA Level 1): Best Execution Is Multi-Dimensional, Advanced Analytics and Venue Selection, and Quick Glimpse into Dark Pools. Key definitions, formulas, and exam tips.
• Management of Cash Flows in Model Portfolios
  Management of Cash Flows in Model Portfolios (CFA Level 1): Why Cash Flow Management Matters, Timing of Contributions and Withdrawals, and Aligning with Rebalancing Schedules. Key definitions, formulas, and exam tips.