Chartered Investment Manager (CIM) Practice Exam · Question
A client IPS states the objective is to 'achieve an average annual return of 6% to support retirement expenses.' It further specifies 'a maximum portfolio drawdown of 15% historically.' Which IPS section would typically contain the average annual return objective?
The 'average annual return of 6%' is a specific, measurable investment objective that the portfolio is designed to achieve. This belongs in the investment objec
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Question: A client IPS states the objective is to 'achieve an average annual return of 6% to support retirement expenses.' It further specifies 'a maximum portfolio drawdown of 15% historically.' Which IPS section would typically contain the average annual return objective?
Answer options: ✅ Investment objectives
- Risk parameters
- Constraints
- Specific investment policies
Correct answer: Investment objectives
Explanation: The 'average annual return of 6%' is a specific, measurable investment objective that the portfolio is designed to achieve. This belongs in the investment objectives section, distinct from risk parameters or constraints.
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