Chartered Investment Manager (CIM) Practice Exam · Question
An institutional investor requests that their portfolio manager adhere strictly to a mandate of being invested solely in Canadian dividend-paying common stocks listed on the TSX. The manager, however, starts investing small percentages in U.S. dividend-paying stocks and Canadian REITs to enhance yield. This situation represents a clear example of:
The manager's deviation from the 'solely in Canadian dividend-paying common stocks listed on the TSX' mandate by including U.S. stocks and REITs constitutes bot
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Question: An institutional investor requests that their portfolio manager adhere strictly to a mandate of being invested solely in Canadian dividend-paying common stocks listed on the TSX. The manager, however, starts investing small percentages in U.S. dividend-paying stocks and Canadian REITs to enhance yield. This situation represents a clear example of:
Answer options:
- Prudent investment diversification
- Active portfolio management ✅ Breach of investment policy guidelines and style drift
- Opportunistic asset allocation
Correct answer: Breach of investment policy guidelines and style drift
Explanation: The manager's deviation from the 'solely in Canadian dividend-paying common stocks listed on the TSX' mandate by including U.S. stocks and REITs constitutes both a breach of investment policy guidelines and style drift, as the actions were not within the explicit scope of the agreement.
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