FSA courses

INV 101

Portfolio Management

2 discussions

Explanation

INV 101: Liquidity constraints belong in asset allocation

Expected return and volatility do not fully describe whether a portfolio can fund liabilities on time. Some assets may be difficult to sell or subject to stress-related cash demands.

Original practice scenario

In an original scenario, a portfolio has adequate total value but significant claims due next month. Map cash maturities and liquid assets against obligations, then consider stressed sale values. Explain the return trade-off from holding more liquidity rather than assuming market value is immediately available cash.

Study check

Write the assumptions, the decision being supported and one limitation. Use the current course syllabus for the required terminology and scope; this introductory guide is not a complete course summary.

Reading sources

Official syllabus and resources

ActNet editorial guide · October 1, 2026 · Original illustrative examples.

0 repliesOct 1

Explanation

INV 101: Benchmark choice defines the performance question

A portfolio’s return should be compared with a benchmark consistent with its objective and constraints. Higher return alone does not establish better management if the risk, duration or liquidity exposure differs.

Original practice scenario

An original insurance portfolio outperforms a short-duration benchmark after taking longer-duration exposure. Attribute the result before describing it as skill. Identify whether the benchmark reflects liability needs and investable constraints, and compare both risk and return.

Study check

Reading sources

Official syllabus and resources

ActNet editorial guide · October 1, 2026 · Original illustrative examples.

0 repliesOct 1