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   CFA 2020 L3 STUDY NOTES
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SS1 ETHICAL & PROFESSIONAL STANDARDS (1)

 

R1 Code of Ethics & Standards of Professional Conduct

 

R2 Guidance for Standards I-VII

 

R3 Application of the Code & Standards: Level III

 

 

SS2 ETHICAL & PROFESSIONAL STANDARDS (2)

 

R4 Professionalism in the Investment Industry

 

R5 Asset Manager Code of Professional Conduct

 

R6 Overview of the Global Investment Performance Standards

 

 

SS3 BEHAVIORAL FINANCE

 

R7 The Behavioral Finance Perspective

 

R8 The Behavioral Biases of Individuals

 

R9 Behavioral Finance & Investment Processes

 

 

SS4 CAPITAL MARKET EXPECTATIONS

 

R10 Capital Market Expectations, Part I: Framework & Macro Considerations

 

R11 Capital Market Expectations, Part II: Forecasting Asset Class Returns

 

 

SS5 ASSET ALLOCATION & RELATED DECISIONS IN PORTFOLIO MANAGEMENT

 

R12 Overview of Asset Allocation

 

R13 Principles of Asset Allocation

 

R14 Asset Allocation with Real-World Constraints

 

 

SS6 DERIVATIVES & CURRENCY MANAGEMENT

 

R15 Option Strategies

 

R16 Swaps, Forwards, & Futures Strategies

 

R17 Currency Management: An Introduction

 

 

SS7 FIXED-INCOME PORTFOLIO MANAGEMENT (1)

 

R18 Overview of Fixed-Income Portfolio Management

 

R19 Liability-Driven & Index-Based Strategies

 

 

SS8 FIXED-INCOME PORTFOLIO MANAGEMENT (2)

 

R20 Yield Curve Strategies

 

R21 Fixed-Income Active Management: Credit Strategies

 

 

SS9 EQUITY PORTFOLIO MANAGEMENT (1)

 

R22 Overview of Equity Portfolio Management

 

R23 Passive Equity Investing

 

 

SS10 EQUITY PORTFOLIO MANAGEMENT (2)

 

R24 Active Equity Investing: Strategies

 

R25 Active Equity Investing: Portfolio Construction

 

 

SS11 ALTERNATIVE INVESTMENTS FOR PORTFOLIO MANAGEMENT

 

R26 Hedge Fund Strategies

 

R27 Asset Allocation to Alternative Investments

 

 

SS12 PRIVATE WEALTH MANAGEMENT (1)

 

R28 Overview of Private Wealth Management

 

R29 Taxes & Private Wealth Management in a Global Context

 

R30 Estate Planning in a Global Context

 

 

SS13 PRIVATE WEALTH MANAGEMENT (2)

 

R31 Concentrated Single-Asset Positions

 

R32 Risk Management for Individuals

 

 

SS14 PORTFOLIO MANAGEMENT FOR INSTITUTIONAL INVESTORS

 

R33 Portfolio Management for Institutional Investors

 

 

SS15 TRADING, PERFORMANCE EVALUATION, & MANAGER SELECTION

 

R34 Trade Strategy & Execution

 

Motivation to trade: 1.      Profit seeking: prevent info leakage through dark pools, ATSs/MTFs/SIs 1.1  Short-term (information): high alpha decay & urgency 1.2  Long-term: (value): low alpha decay & urgency 2.      Risk management/hedging needs: derivatives use, ETFs 3.      Cash flow needs (liquidity): 3.1 New mandate: cash drag, equitization, futures, ETFs 3.2 Client redemptions: NAV, tax 4.      Corporate actions/index reconstitutions/margin calls: reinvestment, closing price, high urgency

Trade strategy inputs: 1.      Order characteristics: side, size (absolute, relative % of ADV) 2.      Security characteristics: security type, short-term alpha, price volatility, security liquidity 3.      Market conditions: low liquidity crises & high volatility 4.      Individual risk aversion: preference for high urgency, high market impact, low execution risk (trader’s dilemma)

 

 

R35 Portfolio Performance Evaluation

 

R36 Investment Manager Selection

 

 

SS16 CASES IN PORTFOLIO MANAGEMENT & RISK MANAGEMENT

 

R37 Case Study in Portfolio Management: Institutional

 

R38 Case Study in Risk Management: Private Wealth

 

 

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