Global Investment Fund Analysis

This assignment analyzes several prominent global investment funds, evaluating their performance based on factors like return on investment, risk levels, expense ratios, and diversification strategies. The analysis aims to identify suitable funds that balance growth potential with risk management and provide a minimum return of 2.50% per annum.

PORTFOLIO ASSIGNMENT

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By student name
Professor
University
Date: 07 January 2018.
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Executive Summary
In the given assignment, a portfolio needs to be constructed as a mutual fund manager of one of the
successful investment company in Montreux. This portfolio will be worth $250000 and it will consist of 6
best funds all over the world making it a best avenue for investment for the risk averse retail investor,
who is expecting a minimum return of 2.5% per annum. The selection of the funds has been done
considering various factors like the market capitalization of the fund, the returns, risk and stability of the
given fund over the past few years. Furthermore, the selection of the funds has not been limited to the
geographies.
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Contents
Introduction: Construction of the Portfolio of funds...................................................................................4
Selection of the funds and the reasoning....................................................................................................5
Conclusion...................................................................................................................................................8
References...................................................................................................................................................9
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Introduction: Construction of the Portfolio of funds
A portfolio may be defined as a group of financial assets that may be in the form of the stocks, bonds,
cash equivalents or even in the form of the mutual funds, closed funds or exchange traded funds.
Portfolio construction is based on the idea of prudence, risk aversion and what is the objective of the
investor. It diversifies the risk, increase the returns, and secures them too. A conservative investor as
mentioned in the question will opt for a mix of large cap funds, liquid funds, broad based market
indexed funds and one that is having average growth over the past years (Linden & Freeman, 2017). It is
a kind of investment programme that is professionally managed and deals in diversified holdings.
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Selection of the funds and the reasoning
In the given case, 6 major investment funds have been chosen using various parameters and the
proportion of investments has been assigned likewise to ensure continuous growth and lower risk.
Sl. No. Name of the fund Last 1 year returns Last 3 year returns Allocation %
1 T. Rowe Price Target 2020 Fund 13.14% 5.56% 13%
2 Northern Global Tactical Asset Allc Fund 13.90% 5.73% 12%
3 Loomis Sayles Global Allocation Fd 21.08% 7.93% 16%
4 Goldman Sachs Growth Strategy Portfolio 20.95% 7.58% 25%
5 American Funds Global Balanced Fund 14.92% 4.56% 18%
6 Voya Global Multi-Asset Fund 17.55% 5.83% 16%
The above table has been constructed using some considerations and long terms assumptions and
allocation being done to ensure minimum returns and cutting out on the risks. The T. Rowe Price Target
2020 Fund has been selected as it has been rated as one of the most stable and growing funds in the
recent past and suggested for those who want to invest from long-term point of view. It emphasizes not
only on the income but also on the capital growth (Bloomberg, 2018). It has a wide variety of investment
that includes both stock as well as bonds of various asset classes and sectors. It is based on retirement
mechanism and a target age of 65 beyond which the investor would stop investing. It has yielded
13.14% over the past year and 5.56% over last 3 years. The best part is that the expense ratio is minimal
and as low as 0.18% . Morning Star rates it as average risk investment.
The 2nd fund chosen is Northern Global Tactical Asset Allc Fund which is rated as world no. 1 in world
allocation. It focuses on both income and capital appreciation. It primarily invests in the combination of
ETFs and the Mutual funds and Northern Trusts Investments Inc. acts as the investment advisor. This
again is best in the market from long term investment point of view and has a return history of 13.90%
in the past year, 6.87% in last 5 years and 4.97% in last decade (Chongsoo, Cheh, & Kim, 2017). Though
the risk is rated to be high considering the return but again the expense ratio is as low as 0.27%.
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The 3rd in the list being considered is Loomis Sayles Global Allocation Fd which again is rated as world no.
2 in world allocation (Morningstar Funds, 2018). It focuses on capital appreciation and current income
and plays safe by investing more than 80% of net assets and all the borrowings in the equity and fixed
income securities in the US. The stocks may include REITs, warrants, depository receipts, common and
convertible stock and other equity like interests. The risk is rated to be high in this fund by Morning Star
but the same is offset by the huge return it gives (21.08% in past year and 9.31% in last 5 years). In
addition, the expense ratio is high at 1.17%.
The 4th fund selected is Goldman Sachs Growth Strategy Portfolio. Rated as rank 5 in the world
allocation, it is considered to be one of the safest bet and stable funds considering its allocation criteria.
The fund invests 75% (+25%/-30%) of assets in equities, 15% (+5%/-15%) in dynamic funds and another
10% (+20%/-10%) in the fixed income funds. On the back of lower expense ratio of 0.59%, it has fetched
extremely good returns of 20.95% in last year and 9.35% over last 5 years. The risk is considered to be
average among the same group of funds (Johnson, 2017).
The 5th investment in the list is in American Funds Global Balanced Fund. It is driven by 3 main objectives
of long-term growth, current income and conservation on principal. It is suited to risk averse invested as
it invests in equity and debt all around the world for growth and dividend income opportunities, while
also looking to protect principal (BlackRock: Financial Planning & Investment Management, 2018). It
invests 40% in other countries and at least 25% in debts and bonds. Rated as rank 3 in world allocation,
the expense ratio is as low as 0.54% and risk is again average with the return of 14.92% over last year.
The last fund selected in the list is Voya Global Multi-Asset Fund. It invests in a number of mutual funds
and ETFs in different countries. It primarily invests to underlying funds which invests in both equity and
debt securities to ensure diversified risk and minimum best returns. Rates as rank 4 in world allocation,
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the risk is considered to be average and the expense ratio is on the lower side to 0.52%. The returns
over the past year has been 17.55% in the last year (Jefferson, 2017).
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Conclusion
From the above analysis and selection of the funds worldwide, it can be concluded that not only the
return is only things that needs to be taken care, but it should also cut out the risks, ensure capital
appreciation without compromising on the current income. It should be ensured that the fund has right
mix of debt and equity and the fixed income is being ensured. From the above selections, the minimum
requirements of 2.50% per annum will be surely met.
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References
BlackRock: Financial Planning & Investment Management. (2018, Jan). Retrieved from Blackrock:
https://www.blackrock.com/
Bloomberg. (2018, Jan). Retrieved from Bloomberg: https://www.bloomberg.com/
Chongsoo, A., Cheh, J., & Kim, I. (2017). Do Value Stocks Outperform Growth Stocks in the U.S. Stock
Market? Journal of Applied Finance and Banking, 99-112.
Jefferson, M. (2017). Energy, Complexity and Wealth Maximization, R. Ayres. Springer, Switzerland .
Technological Forecasting and Social Change, 353-354.
Johnson, R. (2017). The Best Strategies for Investing. In the News, 21-31.
Linden, B., & Freeman, R. (2017). Profit and Other Values: Thick Evaluation in Decision Making. Business
Ethics Quarterly, 27(3), 353-379.
Morningstar Funds. (2018, Jan). Retrieved from Morningstar: http://www.morningstar.com/funds.html
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