Over-commitment Strategy
The manager accepts commitments beyond the target corpus, expecting some investors to default or some deals not to close - the mirror image of the investor's cash management risk.
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
- Absolute-return benchmarkA fixed percentage return, set by the manager when the scheme launches, against which an absolute-return strategy is judged instead of a market index.
- Adverse selectionThe risk of ending up with the wrong manager — picking a fund on a track record or a forward-looking statement that does not predict performance, and getting sub-optimal returns or moral hazard instead.
- AlphaThe return a fund earned above what its beta and the benchmark say it should have earned — the slice of performance left over once the market has been given credit for its share.
- Base Expense RatioThe management-and-administration slice of a scheme's cost, capped by the SEBI slabs — the first and largest of the four components that add up to Total Expense Ratio.
- BenchmarkThe independently published index a scheme's performance is measured against, chosen to match its investment objective, asset allocation and strategy, and disclosed in the Scheme Information Document.
- CAGRThe single smoothed annual rate at which a starting value would have to grow, compounding each year, to reach the ending value over a given period.
Where this is taught
- Series XIX-B · Chapter 6: Fees Structure, Fund Performance and Benchmarkingintroduced here
- Series XIX-D · Chapter 7: Fund Performance and Benchmarking of AIFsintroduced here
- Series XIX-C · Chapter 9: Fee Structure and Fund Performanceintroduced here
- Series XIX-A · Chapter 6: Risk and Return - Investor and Fund Perspectiveintroduced here
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