PORTFOLIO

chandniwadhwani92
Finance Junkie
Posts: 166
Joined: Mon Oct 06, 2014 7:36 am

PORTFOLIO

Postby chandniwadhwani92 » Sat Feb 28, 2015 6:41 am

RELATIVE RISK OBJECTIVES
It is possible for institution to use return on peer portfolio such as endowment funds with a stated objective to be in top quartile of endowment funds returns, peer performance benchmark suffer from not being investable portfolio

THERE I NO WAY TO MATCH THUS INVESTMENT RETURN BY PORTFOLIO CONSTRUCTION BEFORE THIS FACT

My question
What does this sentence means
What does investAble portfolio means

SOURCE OF QUESTION
SCHWESER PAGE 166
BASIS OF PORTFOLIO CONSTRUCTION AND MANAGEMENT
REATIVE RISK OBJECTIVES
LAST PARAGHRAPH

edupristine
Finance Junkie
Posts: 722
Joined: Wed Apr 09, 2014 6:28 am

PORTFOLIO

Postby edupristine » Wed Mar 04, 2015 4:28 am

Hi, the above paragraph is trying to explain that we can use the peer's benchmark rate along with our stated objectives but there is a possibility that peer benchmark we are using is not an investable portfolio (outside the scope of our portfolio). Therefore, we cannot say it with confidence that the peer benchmark used is correct for our portfolio before we construct our portfolio and set our expected returns.
Investable portfolio means a portfolio in which an investor can invest depending upon his objectives and constraints. Though there is an universe of assets to invest in. For example an investor in his 40's who wants to invest for his retirement plan will invest in less risky bonds or instruments and not in equity shares (equity is risky).


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