Information required under Regulation 16
Age; investment objectives and time frames over which such objectives need to be achieved; and resources available such as income, existing investments, innate ability to take risks and details of loans.
This one is not written up yet
The definition above is the short version. A full explanation — how it works, a worked example and the exam traps — is still being written. In the meantime the chapter below covers it in context.
Written up from the same chapter
- Asset allocationThe decision on how to distribute a client's wealth across asset classes — the first decision in building a portfolio, and the one that explains most of what the portfolio then does.
- DiversificationSpreading an exposure across holdings that do not move together, so that total risk falls by more than total return does — minimising risk per unit of return.
- Risk profilingEstablishing how much risk an investor should carry by weighing three separate things — the need to take risk, the financial ability to take it, and the psychological willingness to bear it.
- Strategic asset allocationThe long-term target split of a portfolio across asset categories, fixed from the investor's goals, time horizon and risk profile rather than from any view on markets.
- Tactical asset allocationDeliberately shifting a portfolio away from its strategic target to exploit conditions in particular markets, with the stated aim of improving risk-adjusted return rather than simply chasing return.
Where this is taught
Free preparation for NISM Series X-B← All terms