Sample interview questions: How do you approach the management of illiquid assets within a client’s portfolio?
Sample answer:
Approaching Illiquid Asset Management in Client Portfolios
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Thorough Due Diligence: Conduct rigorous research and evaluation of illiquid assets to assess their suitability for the client’s risk tolerance, time horizon, and financial goals.
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Diversify the Portfolio: Allocate a portion of the portfolio to illiquid assets while maintaining overall diversification to mitigate concentration risk.
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Consider the Time Horizon: Account for the extended holding period typically associated with illiquid assets. Ensure the client’s time horizon aligns with the expected liquidity timeframe.
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Manage Expectations: Communicate the potential risks and rewards of investing in illiquid assets to clients. Set realistic expectations regarding liquidity, potential returns, and holding periods.
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Regular Monitoring: Continuously monitor the performance and valuation of illiquid assets. Track key metrics and seek professional advice when necessary.
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