Is it fair for a manager to allocate shares to be purchased according to the weighted value of the client’s portfolio?
In one of the CFAI Mocks, this was mentioned in the passing and I was confused since I thought this would be a violation under the ‘fair dealing to all clients’ standard.
If someone knows why this isnt wrong, please explain
Thanks
Proportional allocation is OK. Make sure that the investment is appropriate for each client, however, before making the allocation (i.e., check their IPS).
Lets suppose the issue is oversubscribed and the manager doesnt get enough shares as requested by clients. In such cases (assuming no minimum lot sizes), the manager should allocate pro-rata on requested amounts or weighted value of portfolios?
Would it be a violation if he allocated based on value even if he knows about the requests put in?