Chartered Investment Manager (CIM) Practice Exam · Question
A portfolio manager, observing an aging population demographic and shifting consumer preferences, decides to increase the underweight in high-growth technology stocks and slightly overweight dividend-paying, stable utility companies for most of their long-term growth clients. This primarily represents a tilt towards which factor?
Overweighting stable, dividend-paying utility companies and underweighting high-growth technology stocks typically indicates a tilt towards the 'value' factor.
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Question: A portfolio manager, observing an aging population demographic and shifting consumer preferences, decides to increase the underweight in high-growth technology stocks and slightly overweight dividend-paying, stable utility companies for most of their long-term growth clients. This primarily represents a tilt towards which factor?
Answer options:
- Momentum ✅ Value
- Growth
- Size
Correct answer: Value
Explanation: Overweighting stable, dividend-paying utility companies and underweighting high-growth technology stocks typically indicates a tilt towards the 'value' factor. Value investing focuses on stocks that trade below their intrinsic value, often characterized by lower price multiples and higher dividend yields, contrasting with growth stocks.
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