The equity mutual fund’s risk audit committee is currently evaluating a new portfolio construction strategy proposed by a recently appointed portfolio manager. This manager has received capital to manage and has the autonomy to select and implement the portfolio construction techniques they deem appropriate. However, it is a mandatory requirement that any chosen method adheres to the firm's pre-defined key risk control objectives. Which of the following portfolio construction methods accurately reflect their effectiveness in managing risk within the portfolio construction process? | Financial Risk Manager Part 2 Quiz