Reading 7 Trade Allocation

What is the relevance of the statement , ‘Distribute new issues by client, not by portfolio manager’?

one more thing. I am doing schweser for Level 2. Would that be sufficient or should I be doing some other material as well?

any insights on this one?

I have not gotten to PM yet in my L2 prep, but my intuition would say it means to equitably distribute new issuances to all clients fairly, rather than to certain PMs where only their clients would receive issues, disproportionate to other clients.

This is actually from a reading in Ethics, not PM, but I would tend to agree with your intuition. The ciriculum is probably making the statement (in the form of a bullet point) from the viewpoint of the firm.

Regarding Schweser, I’d imagine it would be enough study guide material, but no study guide should fully replace the ciriculum. I’m using Elan/Wiley for L2, and doing all CFA reading EOC questions and using the ciriculum to fill in blanks and add information to readings I’m weak on. I read the full CFA ciriculum for L1 but I don’t feel I’ll have the time to do that and also get in a proper review/mock session for L2.

thank you.

The statement indicates that a fair allocation is made in a client basis, not a manager basis.

Guess this, manager 1 has 50 clients, and manager 2 has only 10. If you distribute the issues equally (50 -50) between the two managers, what clients would be affected? Of course manager 1 clients. Thats not fair.


thank you Harrogath.