Assignment: Finance Project For Finance Expert
Question:
The assignment is an individual report on investment strategy for a small fund. You are the portfolio manager of a UK-based fund and have to build a small portfolio. The fund should be a balanced portfolio of equities and bonds and should include equities from 4 companies and 4 bonds (government or corporate debt securities). You are borrowing £1,000,000 for four weeks at the rate LIBOR + 2.5% (annual quote). Your objective as portfolio manager is to produce a fund that should deliver an annualised return of 15%. The holding period is 4 weeks (beginning and end of investment to be decided by the fund manager). Trading is allowed during the holding period (transaction costs are assumed to be zero). No short-selling nor use of other funds allowed.
Part 1
A) By undertaking fundamental analysis of company shares select at least two equity sectors that you expect to perform well in the coming 4 weeks. Within each sector, on the basis of your analysis (qualitative as well as quantitative such as company news, current and expected P/E ratios, EPS, Dividends, return and sales forecasts, etc.) select 2 companies that you expect to outperform the equity market. By undertaking fundamental analyses on government and corporate bonds (government debt, expectations on credit rating, changes in yield, duration, convexity) select 4 debt securities that you expect to perform well in the coming month.
1. Allocation (% of capital allocated to each asset within the portfolio)
2. Select a benchmark index against which to compare your results at the end of the investment period.
Part 2
Monitor the performance of the portfolio on a weekly basis. In terms of fundamental factors explain reasons for the changes you are observing. Critically evaluate the performance of your portfolios against the performance of the selected benchmark by using the Sharpe ratio, Treynor ratio or Jensen's Alpha.
Part 3
Conclude and explain the divergences you observe between your portfolio and the benchmark in terms of passive or active management theories and concepts.
Format your assignment according to the following formatting requirements:
1. The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
2. The response also include a cover page containing the title of the assignment, the student's name, the course title, and the date. The cover page is not included in the required page length.
3. Also Include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.