Diversification oriented strategies

From Exhibit 2, MultiFAK’s primary strategy is most likely:

risk reduction.
return oriented.

It is risk reduction (overweight low volatility), but the answer as to why it is not a diversification oriented: “uses fewer securities (91 versus 100) overall than the index, which is not a diversification approach.”
If it were a diversification oriented, would it have used more securities than the index? i.e. e.g. 105?

I would think so.

Nevertheless, it’s not a good question: the curriculum doesn’t specify that a diversification strategy must hold more securities than the benchmark does.

Just as I was saying on my previous question :frowning: would it be a good idea to let the Institute know that these questions are quite misleading, and can confuse candidates and what they have learned?


I have a Level III candidate I tutor every other week. We come to that conclusion over and over.