on my schweser notecard i had = normal portfolio return - investor benchmark return. sample # 2 CFAI, q 12- they ask the misfit active return. in the set, they give the client’s return of 12.4, the return of the MSCI of 11.7 (the client’s benchmark), and then the return on the STI index (which the pm benchmarks off of) at 12. answer says misfit active risk = return of manager’s normal benchmark - return of the investor’s benchmark. so just to get my notecards straight- schweser’s “normal portfolio return” should really be whatever the PM benchmark’s off of… not the actual portfolio return from the PM. yes? the CFAI answer on the sample wants that to be true. pls confirm and my notecard will be updated. thx! ps- this sample 2 is a beating so far. if the real test is like this, i am d-e-a-d.
Misfit = Manager’s Normal Benchmark - Investor’s benchmark
This is correct…misfit return is = PM’s benchmark - Investor’s overall benchmark btw…I also got this question wrong on sample 2 along with 14 others…it is a beast
normal portfolio is *always* whatever PM benchmarks off of. Normal Portfolio is by definition a benchmark portfolio for PM that matches its style / mandate.
Let me know your score once you are done. Sample exams are tough
bannisja, Sorry, can advise CFAI’s solution to sample # 2 CFAI, q 12? This kind of confusion can be misleading on the exam !
i got a 60% boston. a few guesses. GIPS smoked me. SMOKED. i need to review GIPS and stop ignoring it like it’s something that’ll just happen easily for me. I was lucky in that sample- the alts and derivs were right in my wheelhouse. L3 is such a funny thing. it’s like the more i study, the more i realize i’m so f&cked this year. i just haven’t put in the time to know this stuff cold. not formulas, not really hard stuff. i am going to fall into every CFA trap in the book. you guys are psyched that i’m going to sit this year. honestly. i am vastly underprepared. that said, sample 2 done, time to walk the dog. after that, i think that i now have slated for the afternoon a hefty dose of GIPS comin’ at me hot. i can’t afford to hit a 2 or 3 for 6’er on it. that is just stupid. keep pushing guys- 2 weeks. 2 weeks! we’re close.
good score Banni. Not many people have scored in 70s so you are in good shape. Agree, we do not want to miss easy questions like GIPS or something in which we do not know the formula…
sounds like we are in the same spot banni… got a 60 last night and also was smoked by GIPS because ive ignored it up to now… aint leaving the library today til I know GIPS cold. also you are right about level 3… bunch of little formulas here and there that arent hard, i just dont remember when they come up… screwed the pooch on misfit return as well.
so what exaclty is misfit return? I figured that it was the style return, ie the return due to benchmark selection for the manager, but now people are saying it’s relative to an investor’s benchmark? I’m kinda confused tbh