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CFA Level I · CFA Level I Exam · Guidance for Standard V: Investment Analysis, Recommendations, and Actions

A client complains about losses in a portfolio managed against a benchmark with a 35% technology allocation. Which record would most likely help the manager show compliance with Standard V(C)?

The client's investment policy statement stating the benchmark was appropriate for the client's objectives. Standard V(C) requires records that support the manager's actions, and the IPS shows the 35% technology allocation followed the agreed mandate.

  1. AThe client's investment policy statement stating that the benchmark was appropriate for the client's objectivesCorrect
  2. BThe manager's personal opinion of the technology sector's long-term prospects
  3. CPress coverage of the client's complaint after the losses occurred

Explanation

In the guidance example, the manager should retain the IPS showing the benchmark suited the client's objectives, along with records that the process was explained and the IPS updated regularly. The other options do not substantiate the actions taken.

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