The question:
Chen and Garcia then turn their attention to portfolio management approaches. Chen prefers an approach that emphasizes security-specific factors, does not engage in factor timing, and builds a diversified portfolio.
Chen’s preferred portfolio management approach would be best described as:
The answer is discretionary. But discretionary does engage in factor timing. Chen does not engage in factor timing. Why not systematic?
Exactly, I’m wondering the same thing. In my opinion it’s an error, either in the correct answer or in the description to the problem
Have you guys checked the errata? Perhaps is mentioned.
Errata : ‘‘In the solution to practice problem 15 (page 525 of print), the second sentence should read as follows: “Chen prefers an approach that emphasizes security specific factors, does not engage in factor timing, and runs a concentrated portfolio.”’’
The key word is runs concentrated portfolios.
Them’s three key words.
To lizihengtotti,
The CFAI has revised this question and answer in a recently updated errata, which is available on the official website.
In the information for questions 9-15, the last paragraph (page 536 of print) should read as follows: “Chen and Garcia then turn their attention to portfolio management approaches. Chen prefers an approach that emphasizes security-specific factors, engages in factor timing, and typically leads to portfolios that are generally more concentrated than those built using a systematic approach.”