Wealth Management
prepare a well-defined investment plan and framework with initial hypothetical value of £2,000,000. You should clearly specify the asset allocation per category (i.e. physical and/or financial assets) in your plan.
Hypothetically the £2,000,000 is to be invested in shares and/or other financial instruments and/or physical investments and you should choose only investments whose prices are quoted in the Financial Times, or are obtained from other reliable sources, which you must identify.
Cash balances can be invested to earn LIBOR – 1%. Any borrowing will be at LIBOR + 1%. Interest should be calculated daily and included in valuations. Allow for dividends and other distributions.
You investment plan should include sections on macroeconomic, industry, country and political risk analysis, but also specify the size and composition of an investment portfolio with clear strategies in risk diversification and hedging.
Your entire well diversified wealth growing portfolio OR a part of it should be fed to a portfolio simulation engine online with results observed daily, but recorded weekly. If the entire portfolio could not be re-created in one single portfolio engine or platform, you can either use more than one platform (i.e. Bloomberg, FX, Etc.) or simulate only part of it through an online portfolio engine. You should properly justify you choice and any possible technical constrains.
You should manage it in a dynamic fashion, with transactions made at appropriate points in the price evolution path of a well-diversified portfolio. You should investigate the effects of portfolio optimization through a comparative portfolio pricing framework.
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You should compute portfolio risk and return as part of the Markowitz framework and investigate the use the Sharp model in the context of portfolio re-pricing and draw clear conclusions of its usefulness.
Further on, you should investigate both passive and active portfolio management tactics. Clearly state and justify your portfolio management style (i.e. active versus passive).
Identify and use (if and when appropriate) any other financial information such as 1) share prices and headline impact on share price, 2) retained earnings, 3) dividend payouts, 3) ratios such as liquidity, efficient use of assets, leverage, and profitability, and other financial information you would consider necessary to create a good understanding of the “attractiveness” of each investment.
Use relevant articles, journals in your research (which you should clearly identify) to support your work in setting up and managing wealth through a well-diversified investment portfolio.
You should also explain the investment strategy you have followed. Your strategy statement should include a statement on your attitude to risk. You should provide details of the transactions you have undertaken, with a critical evaluation of these transactions in the context of your investment strategy, identifying the theoretical basis for your investment decisions.
You should comment on the overall investment performance of your portfolio from the day it was set up (i.e. Week 7 or earlier) to the close of business on Friday of Week 11, and of the components that make it up. Your evaluation should include measures of performance and comparisons with appropriate indices for the types of investment and sectors that you have chosen. Although the portfolio observation is time-boxed, this does not mean that it has to be set up as a short term investment. It might be set up as a short term, a medium or long term investment portfolio, as neither minimizes or negates the positive effects of the theory that underpin the investment portfolio set up and management with proper asset and capital allocations.
In your comments on portfolio performance, you should explain what you have learned from the exercise, and what if anything you might change if i) you did the same thing again as an academic exercise, and ii) you were investing your own money.
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You should explain to what extent you might expect professional wealth managers to follow a strategy similar to the strategy that you adopted during the course.
Your work should be referenced, and contain a list of the sources of (i) your evidence and (ii) the theory that underpins your analysis and commentary.
Section 2.0
CW Report Marked on a 100% scale, but weighted at 60% of the overall module mark.
You are required to produce and submit a final report with a word count between 2500 to 3500 words, excluding calculations, tables and appendices, and should be shown in your report.
The printed report should focus on all assignment requirements as specified in section 1.0. and should be submitted i) electronically via blackboard by 5 pm on Friday of Week 10 (current semester), and 2) hardcopy submitted through the registry.
Section 3.0
Report Classed ”DESCRIPTIVE”:
Report Marking Grid, Capped at 50% if the approach is descriptive; lacks reasonable levels of critical reading, thinking and reflection.
FIN6A8 Individual Coursework HELP DOCUMENT
This is an INDIVIDUAL Summative Assignment.
SUGGESTIVE…
1. ASSET ALLOCATION
1.1 PORTFOLIO SIZE (5 TO 15 ASSETS) 1.2 PORTFOLIO COMPOSITION
?
1.2.1
1.2.2
PHYSICAL ASSETS 1.2.1.1. REAL ESTATE 1.2.1.2. LAND
1.2.1.3 ETC FINANCIAL ASSETS
1.2.2.1 EQUITY
1.2.2.2 DEBT
1.2.2.3 HYBRID
1.2.2.4 DERIVATIVES (BTH DEBT AND EQUITY
BASED)
1.2.2.5. BANKING INSTRUMENTS 1.2.2.6. ETC.
COMMODITIES 1.2.3.1. GOLD
1.2.3
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?1.2.3.2 CRUDE
1.2.3.3 FARMINED PRODUCTS 1.2.4 CURRENCIES
1.3 DIVERSIFICATION
????1.3.1 1.3.2 1.3.3
1.3.4
SECTOR/INDUSTRY DIVERSIFICATION GEOGRAPHY/MARKER DIVERSIFICATION TYPE DIVERSIFICATION
1.2.3.1 SUB-TYPE DIVERSIFICATION RISK/RETURN PROFILE DIVERSIFICATION
1.3.4.1 MARKOVITZ FRAMEWORK 1.3.4.2 SHARP FRAMEWORK 1.3.4.3 ETC
????????1.3.5
2. 1 CAPITAL ALLOCATION
MINIMAL CORRELATION DIVERSIFICATION
??2.1.1 2.1.2 2.1.3
BASED ON CENTRAL TENDENCY (EQUAL WEIGHTS) OPTIMIZED PORTOFLIO AROUND A FIXED TARGET
DYNAMIC CHANGE OF WEIGHTS THROUGH TRANSACTIONS
????3. PORTFOLIO MANAGEMENT ISSUES
3.1. PASSIVE PORTFOLIO MANAGEMENT 3.2. ACTIVIVE PORTFOLIO MANAGEMENT
CW Report Marked on a 100% scale, but weighted at 60% of the overall module mark.
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You are required to produce and submit a final report with a word count between 2500 to 3500 words, excluding calculations, tables and appendices, and should be shown in your report.
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