Portfolio Management Process According to CFA Institute - Isaac Fang Portfolio Management Process According to CFA Institute - Isaac Fang
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Portfolio Management Process According to CFA Institute

Portfolio Management Process according to CFA institute

Firstly, it is important to attribute that the knowledge is obtained from CFA material on portfolio management. I am not sure if you noticed 2 iterative flows within the process loop. One iteration involves the client, to employ RRTTLLU and the other involves the dynamic market universe requiring RDMILT to set proper return expectations. Actually the advisory process will blend the 2 iterations.

Both loops are quite dynamic in nature. The market state changes frequently which alters the investment view and may require adjustments to the portfolio. Personal life stage changes also affect their financial plans through a change in priorities.

Forward statistics are not stable.

This is an absolute horror for financial modelling. Recalibration and optimisation of the correlation coefficients periodically proves model stability needs to be questioned whenever deviation from expected outcomes have exceeded certain thresholds beyond comfort.


To make things complicatedly simple, there are a variety of ways to examine the situation before distilling what is relevant to decision making in today’s world of information overload. Emotional considerations may render a less rational approach taken towards an issue, which has its validity in its own way.

If it is not an exact science, it is a craft. Only guidelines apply but not hard coded rules. Compliance can only tell you what is wrong, but cannot diagnostically pinpoint the right thing to do in a situation. There is right, wrong, not right, not wrong. Each is distinctively different. Compliance to the letter of a law does not mean compliance to the spirit of the law. That is another simple truth.

For example, using term insurance for child tertiary education funding is clearly wrong and will get flagged up by compliance. But a whole life policy may be proposed for the same purpose so long as a reasonable basis (that is all the law requires) can be shown. You are entitled to your thoughts and opinions on the appropriateness of the proposal.

If you would like a design driven approach that combines both quantitative and qualitative considerations, experience the craft for yourself with an appointment with me.


  1. […] the framework in cyclic fashion is close to the work of portfolio management already. Inject the details of the framework to fit your unique self. If you would like a design […]

  2. […] you would like investment portfolio management with a trading perspective, do not hesitate to make an appointment with […]

  3. […] above components for sure so the framework is robust. It can be used for your investment plan and portfolio management […]

  4. […] Portfolio Management follows a process too. Click here. […]

  5. […] decision, there are still risks of unanticipated events that can derail an investment view (see portfolio management iterations). Not making effort to understand enough before making the decision is quite reckless. […]

  6. […] the duration extent of the pullback to decisively short the market. Position sizing and overall portfolio management to diversify methods and approaches even, become significant. Everyone can have a view, and the […]

  7. […] RRTTLLU as well as RDMILT. They need to be integrated into a framework as part of the portfolio management process. You concoct your own blend to match the extent of mental freedom required in your portfolio […]

  8. […] the Portfolio Management Process. Make your own play. If you need assistance, do make an appointment with […]

  9. […] be used in conjunction with other instruments to manage risk or express investment views as part of overall portfolio management, please do not hesitate to make an […]

  10. […] short? What is your time horizon holding period? For trading or investment? Does it fit into your asset allocation? Want advice? Make an […]

  11. […] market hypothesis? I have written about the framework, distilled further even and shared the entire process overview. Appreciate the interconnections between them and you will smell the difference between a financial […]

  12. […] if you are not mentally prepared to engage the market with the right perspectives. So what is the right perspective? You got to recognise that the market has rational and irrational components, but you have to be […]

  13. […] (market loop) These 2 loops combine into 1 process, telling you that both are equally important. For more elaboration on those 2 loops, read here. (Thou shall not repeat what has already been said. Here’s to show consistency across all blog […]

  14. […] What has this got to do with investment advisory you might think. It is interlinked with the framework, approach, and moving forward, a part of the iterative process of portfolio management! […]

  15. […] Portfolio Management Process According to CFA Institute […]

  16. […] that investment portfolio management is a loop. Future events can only be anticipated but not cast in stone. There is no luck, only […]

  17. […] with the audience the importance of approaching the markets correctly. I relied heavily on the portfolio management process as taught in the CFA institute, and the citation from CMFAS textbooks which likely all good […]

  18. […] Apply the investing framework and its distillate process. Diversify approaches to the market and look into your own overall portfolio management process. […]


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