Industry Study

BFF5270: Funds Management Semester One, 2014

word count: 5780

Executive Summary 1.0 Introduction 1.1 Purpose 1.2 Scope 1.3 Methodology 1.4 Assumptions 2.0 Strategic Asset Allocation (SAA) 2.1 Investment Policy Statement 2.2 Historical returns of each asset classes 2.3 Portfolio Management Options 2.3.1 Forecasted returns 2.3.2 Growth 2.3.3 Balanced 2.3.4 Capital stable 3.0 Portfolio Performance over 1993-2013 3.1 Average portfolio returns and Sharpe ratios 3.2 Average returns trailing 3 and 5 years 3.3 Performances of three portfolios over the period 3.4 Standard deviation of portfolio returns 3.5 Probability of a negative return in any one year 3.6 Monthly value at risk (VaR) 3.7 Analysis of how portfolios meet the investment objectives and constraints 3.8 Sales pitch 4.0 Equity Portfolio Management 4.1 Portfolio construction 4.2 Equally-Weighted Portfolios and Performance 4.3 Summary Statistics 4.4 Growth or Value 4.5 Winner and Loser stocks 4.6 Momentum Investing 4.7 Transaction Costs 5.0 Conclusion 6.0 References 7.0 Appendices

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Executive Summary

Superannuation benefits more than ever are a crucial form of income for ageing persons.

Superannuation has become an increasingly important factor to employers and employees respectively. Recent changes in taxation alongside changes in the age of access to entitlements mean a company must make a firm and sound investments to ensure payments are met to retiring workers.

The following report addresses consumer expectations of certain type of portfolio’s related to the superannuation options offered by DRW Investment Company (DRW). Increasing inflation and costs mean elderly persons need a higher and more secure return from their superannuation. This report will focus primarily on: • • • • Types of Portfolios (Growth, Balanced, Capital Stable) Investment Styles (Value vs Growth) Benchmarks Asset Allocation...