CIMA Manager Search and Selection 2

Question 1

Which database is most commonly used by investment consultants to screen investment managers during the initial search phase?

Accepted Answer

eVestment

Answer

eVestment is the primary institutional database used by consultants to screen and compare investment managers across strategies.

Question 2

What is 'style drift' in the context of investment manager evaluation?

Accepted Answer

A manager deviating from their stated investment style or mandate

Answer

Style drift occurs when a manager deviates from their stated investment style, which can disrupt a client's intended asset allocation.

Question 3

In a manager search RFP, which section most directly reveals whether the manager's investment process is repeatable?

Accepted Answer

Investment philosophy and process description

Answer

The investment philosophy and process section documents the systematic approach the manager uses, indicating whether results can be consistently replicated.

Question 4

A consultant is evaluating two managers with identical 5-year returns. Manager A has a Sharpe ratio of 1.2 and Manager B has a Sharpe ratio of 0.8. What does this indicate?

Accepted Answer

Manager A generated higher risk-adjusted returns per unit of volatility

Answer

A higher Sharpe ratio indicates that Manager A generated more return per unit of risk (standard deviation), making them more efficient on a risk-adjusted basis.

Question 5

What is the primary purpose of a 'finals presentation' in the manager selection process?

Accepted Answer

To allow shortlisted managers to present directly to the investment committee

Answer

The finals presentation gives shortlisted managers the opportunity to present their strategy, team, and process directly to decision-makers before a final selection is made.

(CIMA) Certified Investment Management Analyst Practice Test

(CIMA) Certified Investment Management Analyst Practice Test

CIMA Manager Search and Selection 2