Investment Management – analysing an investment portfolio

Your assignment should be around five thousand words in length and you may also include a section for notes and diagrams. You should include a bibliography or references section with your submission, but the number of words in this element will not be included in determining the word count. You should not exceed the upper word count limit of five thousand words. Any submissions which exceed the word count will only be marked up to 5000 words plus 10%. The remaining part of your assignment will not be marked. If you wish to add additional information to your assignment, this should be added as an appendix. Candidates will be assessed on the basis of their knowledge and understanding of the topics covered as well as the lucidity and conciseness of their answers. You will be especially rewarded for demonstrating analytical reasoning skills and revealing an ability to balance a big picture assessment of the topics being examined, as well as sufficient details and specific examples to show that you have a comprehensive understanding of the products discussed. GENERAL GUIDELINES While it is perfectly legitimate to make reference to various Excel workbooks which are part of the course it is not acceptable to simply take them in existing form and submit, in support of your assignment, the specific values that were included in them at the time they were uploaded to the learning platform. There must be evidence that you have changed inputs and performed recalculations or added some additional logic to support your arguments. Please do not submit actual Excel files but rather you should “print” relevant sections to a Microsoft Word document, or take a screen shot of the relevant sections of a worksheet and insert the graphic along with the text in the Word document. Any Excel files which are submitted will not be assessed by the examiner. It is not necessary to include a recital of the questions for this Assignment within your submission. IFF Distance Learning: The Mechanics of Investment Management Asset Management Final Project: Date: July 2021 You have been hired by an investment management company, and as your first task you have been asked to provide analysis of a portfolio belonging to a potential client. The portfolio has been created by a wealthy individual, whom created a profitable business which he sold for 350 million dollars, and over the years since he sold his company, from the age of 56 to 66 he has managed the money as well as he could by himself, using the advice of a couple of stockbrokers and investment advisors. He is getting tired of daily looking after his money and wants to pass on to a more relaxing phase in is life, where he can focus on fishing and his philanthropic activities. Returns of the portfolio have been disappointing. Although his 350 million is now worth 426 million, this is over a ten year track record, and there have been some major disappointments. In the stock market he had been very active till about 2017 in US stocks, had been strongly invested in some Emerging market stocks and had lost and his gains mainly were coming from a high yield portfolio in European debt, and some venture capital investments. Your boss thought is not to be a well thought out portfolio to support a philanthropic foundation, rather he sees it as a collection of diverse securities and funds that were brought by various advisor with no thought to the whole. Currently in the portfolio there are: UK individual stocks: 12% SP 500 index fund, 6% Greek stocks: 9% Eurodollar leveraged loan portfolio: 5% Swiss government bonds: 13% Dollar sovereigns: 9% European Sovereign loans: Portugal, Spain, Italy, Ireland, Greece 7% Portfolio of Dax based stocks: 13% Two venture capital portfolios, one California focused and one Asian focused. 9% European High Yield Debt Fund 5% Cash: 5% All is fairly liquid *monthly, except the venture capital portfolios *6 years remaining life, and the High yield debt fund, 6 month redemption period. Not sure how liquid the stock positions might be, depends upon their size. In his view, the portfolio is a moderate risk but high growth portfolio, which unfortunately has not performed up to expectations. Due to certain losses in the portfolio, its return has been 2% annualized over the last ten year period, with a volatility of 11%. The goal of the portfolio was to have above average returns, with lower volatility than the markets themselves so as to grow the wealth of the principal. The owner of the portfolio is rather tired looking after it himself, and wants to engage a wealth manager such as your firm to run the portfolio for him. In the first instance, however, he has a series of questions for you. His questions for you are as follows: 1. How does my portfolio compare to an “average investors portfolio” of a similar size both in terms of risk profile and in terms of returns. To answer this question you need to look at a couple of foundation portfolios and a couple of pension fund portfolios, and calculated returns and volatility over the past years. 2. Why have my returns been low, except for a couple of positions, my high yield portfolio has done well, one of the venture capital portfolios have done well, and recently, the SP 500 exposure has done quite well, but otherwise returns have been fairly disappointing. To answer this question you need to dig out some of the recent returns of the asset classes involved and comment on their current risk levels. 3. I have been advised by one of my advisors to look up the Global Market Portfolio, and I have given you some summary information found on Google. (included as in the Annex). What would be the advantages in risk and returns in running my assets in this kind of Global Market portfolio? 4. Is the Global Market Portfolio a good “benchmark” to use for my existing portfolio? 5. Is my current portfolio more “Risky” than the Global Market Portfolio? 6. How would you recommend structuring my existing portfolio in order to have a better return but a risk profile lower than the Global Market Portfolio? 7. Should I go into this SPV attached my OakPoint LLc for the investment in Bourbon, and what are the risks here?