Equity Investments

Equity Investments at CFA Level 3 focuses on advanced portfolio management concepts and strategies for equity securities. This builds upon fundamental and quantitative analysis from previous levels, but with greater emphasis on constructing, managing, and evaluating equity portfolios. Key areas include: 1. Passive Equity Investing: Index construction methodologies, tracking error management, and implementation strategies like full replication, sampling, and optimization. 2. Active Equity Investing: Value vs. growth styles, market-oriented, small-cap strategies, and other factor-based approaches. 3. Equity Portfolio Construction: Bottom-up vs. top-down approaches to security selection and portfolio formation, with considerations for risk controls, diversification, and meeting client objectives. 4. Fundamental Analysis Applications: Integrating industry analysis, competitive positioning, and valuation models into portfolio decisions. 5. Global and Emerging Market Equities: International diversification benefits, risks (including currency exposure), and specialized implementation considerations. 6. Performance Evaluation: Attribution analysis to determine sources of returns across sectors, style factors, and security selection. 7. Tax Efficiency: Tax-aware portfolio management techniques specific to equity portfolios. 8. Trading and Execution: Cost analysis, market impact considerations, and execution strategies to enhance returns. 9. Equity Risk Management: Using derivatives and other hedging techniques for controlling portfolio risk. At Level 3, equity investments are approached from a portfolio manager's perspective, requiring candidates to integrate client needs with investment processes. The focus shifts from security analysis to portfolio-level decisions, strategy implementation, and evaluation. Candidates must demonstrate the ability to synthesize knowledge across multiple areas to create optimal equity solutions for different investor types with varying objectives, constraints, and risk tolerances.

Equity Investments at CFA Level 3 focuses on advanced portfolio management concepts and strategies for equity securities. This builds upon fundamental and quantitative analysis from previous levels, …

Concepts covered: Active Equity Investing: Portfolio Construction, Passive Equity Investing, Active Equity Investing: Strategies, Overview of Equity Portfolio Management