CoachA mandate is the contract by which an asset owner hands a portfolio to a manager. It fixes the investable universe, the benchmark, the risk limits, the fee, and what the manager may not do (leverage, short sales, derivatives, concentration).
Exemples
Example 3.7 (Twenty overweight bets)
A manager overweights 20 stocks by 1% each and underweights 20 others by 1% each. If stock-specific returns are independent with volatility 25% and the common factors cancel, . A mandate that caps the tracking error at 3% leaves room for little more than this: an “active” portfolio is mostly the index.