What defines a total return mandate in portfolio management?

A total return mandate in portfolio management is defined by its focus on generating returns that can be measured in absolute terms or relative to a benchmark. This approach is not limited to a specific asset class or investment strategy. Instead, it seeks to maximize the overall return from the portfolio, which may include income from dividends and interest as well as capital appreciation.

This mandate allows for a diversified investment strategy that can incorporate various asset classes, including equities, fixed income, and alternative investments, to achieve the best possible return. The flexibility of a total return mandate enables portfolio managers to respond to market conditions and adjust their allocations based on where they see the best potential for returns.

In contrast, other options describe aspects that deviate from the principles of a total return mandate. For instance, focusing solely on capital preservation limits a manager's ability to seek growth and higher returns. Similarly, a restriction to fixed income assets or limiting exposure to equities narrows the investment scope, which is contrary to the objective of maximizing total returns across all potential investments.