Read the following article Advisors prepare for Enhanced Suitability from Advisors Edge and comment on the following scenario

Julio Suarez has asked to meet with one of his banks investment advisors and is introduced to Peter Schultz, the banks mutual fund specialist. Julio tells Peter that he has a long investment time horizon (30+ years) and is comfortable with considerable short-term volatility in the expectation of superior long-term returns relative to less volatile securities such as bonds.

Peter suggests the XYZ Global Equity Fund, which has the following characteristics:

The fund has been in existence for 22 years. The fund manager has been at the helm for the past 8 years, he was named Fund Manager of the Year three years ago, and he is often quoted in the financial press and sounds very knowledgeable about global markets.

It is broadly diversified and has below-average volatility and MER relative to other global equity funds. It also has a 4-star rating from one of the fund rating agencies.

It has posted above-average returns relative to bond funds over the past 1, 3, 10 and 20 year periods, above-average returns relative to Canadian equity funds over the past 1, 5, 15 and 20-year periods, and above-average returns relative to other global equity funds over the past 3, 5, 10 and 20 year periods.

The fund has a high 3, 5 and 10 year correlation to the MSCI World Index in Canadian dollars. Their advertising says they have portfolio managers at many locations around the world, so as to stay on top of global conditions. In addition, the funds returns have a low correlation to Julios existing investments.

1. Is Peters recommendation suitable given the Enhanced requirements outlined in the article? Why or why not?
2. Do you feel Peter met his Know Your Product (KYP) obligations? Why or why not?