Level I Portfolio Management

Access to all Level I portfolio management articles until the next Level I exam date

Money-Weighted Rate of Return (MWRR) vs. Time-Weighted Rate of Return (TWRR)

Posted by Bill Campbell III, CFA on August 3, 2020
Posted in: Level I Portfolio Management, Level I Quantitative Methods.

Suppose that you manage an investment portfolio to which cash is added periodically, and from which cash is removed periodically.  A reasonable question to ask is this: How should you determine the correct overall return on the portfolio over a period of time, the one that you should report to clients and prospective clients?  In […]

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Beta

Posted by Bill Campbell III, CFA on January 9, 2014
Posted in: Level I Portfolio Management.

It is not surprising that many CFA candidates (at all levels, not just Level I) have a poor understanding of beta, because a survey of a number of financial websites with glossaries (not the little, obscure ones; the big boys, such as Charles Schwab, Citibank, Deutsche Bank, E-Trade, Investopedia, Putnam Investments, TD Ameritrade, and others) […]

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CAL vs. CML vs. SML

Posted by Bill Campbell III, CFA on September 29, 2013
Posted in: Level I Portfolio Management.

The Capital Allocation Line (CAL), Capital Market Line (CML), and Security Market Line (SML) can be confused easily, and for good reason: the graphs look virtually identical, the assumptions under which they are constructed are essentially the same, and their implications are similar.  We’ll characterize each one and try to eliminate the confusion. The assumptions […]

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