Chartered Investment Manager (CIM) Practice Exam · Question
A clause in an Investment Policy Statement states, 'The portfolio weighting in foreign equities shall not exceed 40% of the total portfolio value.' This is an example of what type of IPS component?
This statement dictates a specific limit on the allocation to a particular asset class (foreign equities), making it an asset allocation constraint that guides
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Question: A clause in an Investment Policy Statement states, 'The portfolio weighting in foreign equities shall not exceed 40% of the total portfolio value.' This is an example of what type of IPS component?
Answer options: ✅ An asset allocation constraint
- A risk tolerance parameter
- An investment objective
- A performance benchmark
Correct answer: An asset allocation constraint
Explanation: This statement dictates a specific limit on the allocation to a particular asset class (foreign equities), making it an asset allocation constraint that guides portfolio construction within the IPS.
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