Legal and Regulatory Factors

Legal and Regulatory Factors - 2-1Legal and Regulatory...

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Unformatted text preview: 2-1Legal and Regulatory Factors•Limitations or penalties on withdrawals•Fiduciary responsibilities–The “Prudent Investor Rule” normally apply•Investment laws prohibit insider trading•Institutional investors deserve special attentions since legal and regulatory factors may affect them quite differently (e.g. banks vs. endowment funds). 2-2Unique Needs and Preferences•Personal preferences such as socially conscious investments could influence investment choice.•Time constraints or lack of expertise for managing the portfolio may require professional management.•Large investment in employer’s stock may require consideration of diversification needs. •Institutional investors needs.2-3The Importance of Asset Allocation•An investment strategy is based on four decisions–What asset classes to consider for investment–What policy weights to assign to each eligible class–What allocation ranges are allowed based on policy weights–What specific securities to purchase for the portfolio2-4Exhibit 2.82-5...
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Legal and Regulatory Factors - 2-1Legal and Regulatory...

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