Sam Yuan, CFA, is a famous asset manager and his historical return is much higher than the average. Recently, the chairman of Green Peace Organization approached Yuan and asked him to manage the pension fund that their employees could voluntarily join. The chairman told Yuan that he could not invest in the chemical industry and the weapons manufacturing industry according to the constraint terms of the pension fund. Yuan objected that in his investment strategy, the weapons manufacturing industry is very important, and the return rate of this industry is very high. Finally, Yuan took over the management of the pension fund following all the terms of the pension fund. Did Yuan violate CFA Institute Code and Standard?
Question
Sam Yuan, CFA, is a famous asset manager and his historical return is much higher than the average. Recently, the chairman of Green Peace Organization approached Yuan and asked him to manage the pension fund that their employees could voluntarily join. The chairman told Yuan that he could not invest in the chemical industry and the weapons manufacturing industry according to the constraint terms of the pension fund. Yuan objected that in his investment strategy, the weapons manufacturing industry is very important, and the return rate of this industry is very high. Finally, Yuan took over the management of the pension fund following all the terms of the pension fund. Did Yuan violate CFA Institute Code and Standard?
Solution
No, Yuan did not violate the CFA Institute Code and Standards. According to the CFA Institute Code of Ethics and Standards of Professional Conduct, investment professionals should consider the specific investment policies, constraints, and objectives of the clients. In this case, Yuan respected the constraints of the pension fund that prohibited investments in the chemical industry and the weapons manufacturing industry. Even though he initially objected due to his personal investment strategy, he ultimately agreed to manage the fund according to the terms set by the client, which is in line with the CFA Institute Code and Standards.
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