CFA Examination Level III
Peter and Andrea Mueller have built up their $600,000 investment portfolio over many years through regular purchases of mutual funds holding only U.S. securities. Each purchase was based on personal research but without consideration of their other holdings. They would now like advice on their total portfolio, which follows:
Type
Market Sector
Beta
Percent of Total
Andrea’s company stock
Stock
Small-cap growth
1.4
35
Blue-chip growth fund
Large-cap growth
1.2
20
Super beta fund
1.6
10
Conservative fund
Large-cap value
1.05
2
Index fund
Large-cap index
1
3
No dividend fund
1.25
25
Long-term zero coupon fund
Bond
Government
—
5
Evaluate the Mueller’s portfolio in terms of the following criteria:
a. Preference for “minimal volatility”
b. Equity diversification
c. Asset allocation (including cash flow needs)
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