Monitoring and Rebalancing

[anupamjain008]

CFAI Text, Reading 33, Page 102, Question Number 2A
I thought that the answer should be to revise the Pension Scheme’s IPS to account for changed inflation forecast because three years is a pretty long time-frame.
Just to take this to an extreme argument, If I am going to expect Zimbabwe-like inflation over the next three years, should I not revisit my clients’ portfolios and update it accordingly?

 

[kschloss]

I think the point they are trying to make is that you only update IPS for Long term changes (5-10 years I guess would be an unstated definition). I too think 3 years is a long time, but apparently the CFAI does not - so this would be considered more tactical - you should make a blanket statement in IPS that you can tacitcally change allocations (within a permissible range) depending on changes in forecasts/CME - then, there is nothing to change in IPS for this.