State the return objective on the IPS

  1. This question seems so basic but always gets me. Do you mind sharing things to look out for? 2. If nothing specific is mentioned, should we assume that we always want to maintain the real value of the portfolio and list this as a return objective?
  1. Quite often they actually say that it is their objective. Or things like “first goal”/“secondary goal”.

  2. I think I haven’t seen a case where it wasn’t requested, but it’s always stated in the text. sometimes a bit hidden. I would assume nothing that is not written there. If you do, clearly say so, otherwise you may not get any points for it.

There was a Schweser mock that had in the case: The 25m portfolio is expected to generate a real return of 4% and cover operating expenses of 0.75%. So given the above, we can say the objective is to maintain the real value of the portfolio, is that correct?

Any other tips on things to look out for when they ask to state the return objective?

Don’t worry about it, they haven’t asked that for at least two or three years. It was easy points, just repeating info directly from the vignette and has seemingly been removed.

Related to this…

before tax required rate of return = gross it up for tax? X% / (1-T)

after tax required rate of return = just leave the X% as it is?

nominal return = add inflation

real return = ignore inflation

It’s supposed to be easy but I find myself mixing it up after mocks and mocks all day.