Portfolio Management Report

BU473-B

Portfolio Management Simulation Report

EXECUTIVE SUMMARY

Our investment objectives for the simulation is (1) high growth, (2) high liquidity, and (3) tax minimization and was determined based on our personal profiles being a young business student with medium level of investment knowledge and high risk tolerance.

Our research revealed that the financial crisis in 2008 has severe negative influences across all industries worldwide. Nonetheless, there exists significant evidence that led us to believe that the economy and the market as a whole are slowly recovering during the short time frame of the simulation. We selected stocks in the high-technology industry, consumer goods and retail industry, commodity industry, automotive industry and financial industry as our main investment focuses and for diversifying systematic risk. Additionally, we used various other diversification and hedging techniques, including purchasing ETF’s and commodities, and building a bull spread using put options, to further control our portfolio risk and returns.

After extensive research and actively managing our portfolio, we realized a holding period return of 9.63%. Our performance was inferior to S&P TSX Composite Index by a small margin on a risk-adjusted basis as our M2 measurement was -0.65% because our portfolio was almost twice as volatile as the market portfolio. Lastly, after accounting for taxes, our portfolio generated an investment income after-tax of $78,153. We were able to realize significant additional disposable income from our investments and hence, we believe that we have successfully achieved our original investment objectives of high growth, high liquidity, and tax minimization.

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EXECUTIVE SUMMARY........................................................................................................................................ ii...