Education

About Compliance

Portfolio Compliance


Portfolio Compliance refers to the adherence of the portfolio to the specific investment objectives and restrictions set by the investor. These objectives and restrictions can include, but are not limited to, factors such as industry and sector exposure, country and regional exposure, environmental, social and governance (ESG) criteria and risk tolerance.


For example, an investor may have an objective to only invest in companies that meet certain ESG criteria, such as having a strong environmental record or promoting diversity and inclusion in the workplace.


Another example, an investor may have an objective to limit their portfolio's exposure to a specific sector or geographic region to align with their risk tolerance or market views. 


In order to ensure compliance, portfolio managers use various tools and techniques, such as portfolio monitoring systems, compliance software and risk management systems, which allows them to track and measure the portfolio's compliance with the investor's objectives and restrictions. They also conduct regular reviews of the portfolio to ensure that it aligns with the investor's objectives and makes adjustments as necessary. 


Additionally, they communicate regularly with the investor to ensure that the portfolio is in line with their objectives, and make any necessary adjustments to the portfolio in response to changes in the investor's financial situation or market conditions.


It's important to note that portfolio compliance is a continuous process, not a one-time event. The portfolio manager must continuously monitor and review the portfolio to ensure that it remains in compliance with the investor's objectives and restrictions, and make adjustments as needed.