AAMS Investment Strategies 2

Question 1

Which tactical asset allocation approach involves shifting weights toward asset classes that have recently underperformed relative to their historical averages?

Accepted Answer

Contrarian rebalancing

Answer

Contrarian rebalancing shifts weights toward underperforming asset classes, betting on mean reversion to historical averages.

Question 2

A client wants to reduce sequence-of-returns risk during the first decade of retirement. Which strategy best addresses this concern?

Accepted Answer

Implementing a bucket strategy with cash reserves for near-term needs

Answer

A bucket strategy holds cash or short-term assets for near-term withdrawals, shielding the portfolio from selling equities at depressed prices.

Question 3

What is the primary objective of a liability-driven investing (LDI) strategy?

Accepted Answer

Matching asset cash flows to future liability obligations

Answer

LDI focuses on structuring assets so their cash flows match the timing and magnitude of the investor's future liabilities.

Question 4

A 130/30 strategy involves what combination of long and short positions?

Accepted Answer

130% long equities, 30% short equities

Answer

A 130/30 fund takes 130% long equity exposure and 30% short equity exposure, maintaining net 100% market exposure while adding alpha potential.

Question 5

Which of the following best describes a 'core-satellite' portfolio construction approach?

Accepted Answer

Pairing a passive core with actively managed satellite positions

Answer

Core-satellite combines a low-cost passive core (e.g., broad index funds) with smaller active or alternative satellite allocations seeking enhanced returns.

(AAMS) Accredited Asset Management Specialist Practice Test

(AAMS) Accredited Asset Management Specialist Practice Test

AAMS Investment Strategies 2