Absolute return objectives sate the percentage return desired by the client. The return may be expressed on a real or nominal basis.
Relative return objectives express the required return relative to a stated benchmark. A good benchmark should be investable i.e., an investor should be able to replicate it.
The return objective may be stated before or after fees and on a pre- or post-tax bais.
It could also be expressed in terms of a required return, that is, the amount an investor needs to earn over the investment horizon to meet a specified future goal.
The portfolio manager must ensure that the client's return objective is realistic in light of her tolerance for risk
Relative return objectives express the required return relative to a stated benchmark. A good benchmark should be investable i.e., an investor should be able to replicate it.
The return objective may be stated before or after fees and on a pre- or post-tax bais.
It could also be expressed in terms of a required return, that is, the amount an investor needs to earn over the investment horizon to meet a specified future goal.
The portfolio manager must ensure that the client's return objective is realistic in light of her tolerance for risk
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