An asset manager follows an active international asset allocation strategy. The average execution cost for a buy
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An asset manager follows an active international asset allocation strategy. The average execution cost for a buy or a sell order is forecasted at 0.6%. On the average, the manager turnovers the portfolio once a year. Various administrative costs, including custodial cost amount to 0.5% per year of assets under management. The annual management fee is 1% of assets under management. The annual expected return before costs is 14% compared to an expected return of 10% on a passive global benchmark (some global index). What is the net annual expected return for the client?Should the client expect the portfolio to outperform the global index used as benchmark?
Related Book For
Accounting Principles
ISBN: 978-1118875056
12th edition
Authors: Jerry Weygandt, Paul Kimmel, Donald Kieso
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