What can be a consequence of not adhering to an investment mandate?

Not adhering to an investment mandate can lead to inconsistent investment decisions and strategies. An investment mandate typically outlines the objectives, strategies, and constraints that guide portfolio management. When an investment manager deviates from these established guidelines, it can result in a misalignment of the portfolio with its intended goals. This inconsistency can manifest as varied asset allocations, increased risk exposure, or the incorporation of investments that do not align with the mandate's requirements.

Such inconsistencies may confuse stakeholders, lead to increased volatility in portfolio performance, and undermine the rationale behind investment decisions. Over time, these deviations can erode the trust that clients and stakeholders place in the investment manager's ability to effectively manage the portfolio. Thus, maintaining strict adherence to the investment mandate is crucial for ensuring consistency in investment strategies and ultimately achieving the desired financial outcomes.