CISI Wealth Management

CISI Portfolio Construction Theory (UK)

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Structured preparation for Portfolio Construction Theory, the second unit in the three-unit CISI Chartered Wealth Manager Qualification.

80 Answer-Planning Prompts Detailed Study Notes Written-Answer Focused Revision

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Course syllabus information reviewed for 2026. Always check the awarding body’s latest official syllabus and candidate updates before booking or sitting your exam.

5 mock exams / unlimited practice

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Prepare for the CISI Portfolio Construction Theory examination

Portfolio Construction Theory, commonly shortened to PCT, is the second unit in the CISI Chartered Wealth Manager Qualification. It is a standalone Level 7 written examination rather than the complete Level 7 Diploma. Candidates progress from Financial Markets and then continue to Applied Wealth Management, subject to the current CISI route requirements.

The current syllabus contains ten learning outcomes across client risk and objectives, asset allocation, risk and return, asset pricing, efficient markets, behavioural finance, fund management, portfolio-level derivatives, performance measurement and UK taxation. The workbook uses the same ten-chapter structure. The syllabus also states that learning builds on Financial Markets and that aspects of the previous unit may be assessed in the PCT examination.

The formal assessment is a three-hour, 100-mark paper with three distinct sections. Section A is worth 20 marks and requires all multiple-choice questions. Section B is worth 40 marks and requires all questions. Section C is worth 40 marks and requires two written answers selected from three, worth 20 marks each.

The learning hub includes ten detailed chapter summaries, 140 flashcards, 152 rapid-reference and exam-trap entries, five 20-prompt practice sets, and a syllabus-grounded AI tutor. Separate Final Exam Practice simulates all three sections in one three-hour attempt: the 20 genuine multiple-choice items are objectively marked, compulsory written questions use answer boxes, and Section C enforces the choice of two answers from three. Written feedback is criteria-based practice, not an official CISI grade. Always confirm the latest official CISI syllabus and Candidate Update for your sitting; this page records the 2026 review year so the guidance remains useful when individual amendments are issued.

Key Benefits

Three-section exam control

Prepare the different response skills needed for compulsory multiple choice, compulsory written questions and the choice in Section C.

✓ Compulsory 20-mark Section A
✓ Compulsory 40-mark Section B
✓ Two 20-mark answers from three

Portfolio decisions connected

Link client objectives and strategic allocation with investment theory, implementation, performance and tax consequences.

✓ Ten workbook chapters
✓ Ten official learning outcomes
✓ Quantitative and written application

Qualification-route clarity

Study PCT as the middle unit while keeping its dependence on Financial Markets and progression to Applied Wealth Management clear.

✓ Second qualification unit
✓ Builds on Financial Markets
✓ Not the complete Level 7 Diploma

Syllabus

Module 1: Client Risk, Objectives and Regulation

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Determine client circumstances, risk characteristics, investment objectives and suitable strategy while applying relevant duties.

• Client circumstances and constraints
• Risk tolerance and utility
• Objectives, policy and strategic allocation

Module 2: Asset Allocation Strategies and Management

Construct, implement and evaluate strategic and tactical allocation using asset-class evidence, constraints and portfolio tools.

• Diversification and correlation
• Strategic and tactical allocation
• MPT, PMPT, CPPI, ALM, risk parity and Black-Litterman

Module 3: Investment Risk and Return

Apply risk-free assets, inflation, foreign currency and time-period concepts to investment risk, return and performance.

• Risk and return metrics
• Inflation and currency effects
• Time-weighted, money-weighted and internal rates of return

Module 4: Asset Pricing and Valuation Metrics

Evaluate asset-pricing models and apply investment and valuation measures within portfolio construction.

• CAPM and the security market line
• Arbitrage and multifactor models
• Security, fund and protection-asset metrics

Module 5: Efficient Market Hypothesis

Evaluate informational efficiency, market evidence, anomalies and their implications for investment approaches.

• Three classic forms of EMH
• Evidence and anomalies
• Links to management style and portfolio theory

Module 6: Behavioural Finance

Explain behavioural-finance theory and evidence and evaluate implications for markets, clients and portfolio design.

• Behavioural evidence and theories
• Market participants
• Portfolio-design implications

Module 7: Fund Management

Evaluate manager selection, active and index approaches, security selection, stewardship and responsible investment.

• Portfolio-manager roles and selection
• Active and index management
• Stewardship, ESG and sustainability

Module 8: Portfolio-Level Derivatives

Appraise derivatives used to control portfolio risk, manage inflation exposure and protect portfolio value.

• Hedge ratios and instruments
• Collateral, margin and liquidity
• Inflation protection and hedging strategies

Module 9: Portfolio Performance

Apply benchmark selection and performance-attribution techniques to assess investment results.

• Peer, customised and index benchmarks
• Client and strategy benchmarks
• Allocation, market, security and currency attribution

Module 10: UK Taxation

Assess how UK taxation affects assets, funds, wrappers, investment returns, valuation and portfolio strategy.

• Direct and indirect holdings
• Net-of-tax returns and values
• Onshore and offshore funds and investment VAT

Frequently Asked Questions

PCT is a three-hour, 100-mark examination. Section A is worth 20 marks and requires all multiple-choice questions, Section B is worth 40 marks and requires all questions, and Section C is worth 40 marks and requires two answers selected from three, worth 20 marks each.

No. It is the second unit. The qualification route also includes Financial Markets and Applied Wealth Management, subject to the current CISI entry and completion requirements.

Yes. The current official syllabus states that PCT builds on Financial Markets and candidates can be assessed on aspects of that previous unit.

The official learning material recommends approximately 200 hours for this unit, including workbook study, tuition where used, wider reading and examination practice.

The ten outcomes cover client risk and objectives, asset allocation, risk and return, pricing models, efficient markets, behavioural finance, fund management, portfolio-level derivatives, performance and UK taxation.

Yes. The learning hub includes ten chapter summaries, 140 flashcards, 152 rapid-reference and exam-trap entries, five 20-prompt practice sets and a syllabus-grounded AI tutor. The objective sets support knowledge and answer planning rather than claiming to reproduce or automatically grade the official written paper.

Yes! Test your knowledge and review detailed explanations with the free CISI Portfolio Construction Theory Mock Exam Preview below. It contains 15 exam-style questions from one named syllabus topic; the full course provides complete mock exams and syllabus coverage.

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Free CISI Portfolio Construction Theory Written Exam Sample Questions

Try 15 CISI Portfolio Construction Theory answer-planning prompts from Chapter 1: Fundamentals of Investment Theory

Practice CISI Portfolio Construction Theory written-exam answer planning with sample prompts and model structures, then unlock all five planning sets and complete syllabus coverage.

Exam Practice

Chapter 1: Fundamentals of Investment Theory

Scenario 1 of 15

Which response most accurately addresses this Portfolio Construction Theory requirement: What is a heuristic?

1 / 15

Flashcards

Card 1 of 10Chapter 1

Question

What is the purpose of a client fact-find in wealth management?

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Focus Learn

Key Written-Exam Areas7

The cyclical wealth-management and investment-decision process
Client fact-find, objectives, constraints and review
Risk tolerance, risk capacity and required risk
Consumer Duty and fiduciary or fiduciary-like responsibility
Utility, indifference curves and the client's optimal portfolio
Expected return, variance, standard deviation, covariance and correlation
Risk premiums and selection of a horizon-appropriate risk-free asset

Written-Answer Pitfalls to Avoid4

Exam Traps4

Key Numbers4

Chapter 1: Fundamentals of Investment Theory

Portfolio construction begins with the client, not with a forecast or a favoured asset. The workbook's wealth-management process starts by gathering quantitative and qualitative information, developing or revising the investment policy, constructing the portfolio, monitoring it and evaluating performance. The stages form a feedback loop because client circumstances, market expectations and realised results can all require the policy or holdings to change.

The fact-find should establish age, wealth, life-cycle stage, jurisdiction, location, tax position, liquidity needs, time horizon, liabilities, knowledge, experience and responsible-investment preferences. These facts must be separated from the client's stated willingness to take risk. Risk tolerance describes psychological willingness;…

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Practice modes

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Instant feedback & explanations

See the answer and explanation after each choice.

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Timed answer-planning practice

Use the timer, keep answers hidden, then review your result.

Who Is This For?

✓ Candidates preparing for the CISI Portfolio Construction Theory examination

✓ Candidates progressing through the Chartered Wealth Manager Qualification after Financial Markets

✓ Wealth managers, private bankers, investment advisers and portfolio professionals

✓ Practitioners developing asset-allocation, portfolio-risk and performance-analysis skills