Case Study in Finance: Portfolio Performance and Investment Components

This case study analyzes the changes in global, economic, and industry environment relevant to the equity market, calculates and summarizes the profitability of the portfolio, mentions the significance of the investment components used for the investment purposes, compares and calculates the performance of the portfolio with the index ASX 200, and provides adequate recommendation for the portfolio structure. The drafted portfolio has performed adequately while providing higher rate of returns from investment. The investment scope used in the creation of the portfolio was relatively adequate, which would eventually help in generating high rate of returns from investment. The created portfolio would eventually help in generating higher rate of returns for investors while reducing the risk from investment.

Running head: CASE STUDY IN FINANCE
Case Study in Finance
Name of the Student:
Name of the University:
Authors Note:

CASE STUDY IN FINANCE
1
Table of Contents
1. Depicting the changes in global, economic, and industry environment relevant to the equity
market:........................................................................................................................................2
2. Calculating and summarising the profitability of the portfolio:.............................................2
3. Mentioning the significance of the investment components used for the investment
purposes:....................................................................................................................................5
4. Comparing and calculating the performance of the portfolio with the index ASX 200:.......5
5. Providing adequate recommendation for the portfolio structure and depicting whether any
alternation is needed:..................................................................................................................6
Reference and Bibliography:......................................................................................................7

CASE STUDY IN FINANCE
2
1. Depicting the changes in global, economic, and industry environment relevant to the
equity market:
The current Global Position for equity market is relatively adequate, which would
eventually help the companies to maximize their profitability during the fiscal year. The
stability in the financial sector of the world is seen, which a positive attribute for the equity
sector of Australia is. Moreover, the current economic position of Australia is a relatively
adequate for companies, as the government is thinking to reduce the corporate tax which will
enable hair growth for the organisation. The company would be able to generate higher
income and retain more profits if the Australian government passes the relevant loss.
Furthermore, the industrial environment is relatively competitive, which is allowing the
organisations to improve their operations and increase profitability in the long run. Therefore,
after evaluating all the relevant factors it could be identified that the current investment
market of the Australian equity is adequate, which could allow investors to generate higher
rate of returns from investment. The drafted portfolio would eventually provide higher
returns from investment due to the presence of positive attributes in the Australian equity
market (Bhatia and Kishor 2015).
2. Calculating and summarising the profitability of the portfolio:
Portfolio 23-02-18
Particulars Price Number Cost Amount
Equity Shares – Purchases
CSL Limited
160.9
1 932
$
149,968.12
NEXTDC Limited 6.71 22,354
$
149,995.34
Premier Investments Limited 13.95 10,752
$
149,990.40
Macquarie Group Limited
101.9
7 1,471
$
149,997.87

CASE STUDY IN FINANCE
3
Technology One Limited 4.9 30,612
$
149,998.80
Fisher & Paykel Healthcare Corporation
Limited 12.37 12,126
$
149,998.62
ResMed Inc 12 12,500
$
150,000.00
$
1,049,949.15
Equity Shares – Short Sales
ANZ Banking Group 28.44 8,000
$
227,520.00
$
(227,520.00)
LICs and ETPs
WAM Capital Limited 2.068 72,533
$
149,998.24
SPDR S&P/ASX 200 LISTED
PROPERTY FUND 12.26 12,235
$
150,001.10
$
299,999.34
Hedged Position for ASX Equity
Investments
Invest in settlement account (Future
contract) 5 20,000
$
100,000.00
$
100,000.00
Cash Investment in Cash Management
Trust
Cash Holding (minimum requirement
$227,520)
$
277,571.51
Total
$
1,500,000.00
Portfolio 15-05-18
Particulars
Pric
e Number Cost Amount
Equity Shares – Purchases
CSL Limited
177.
56 932
$
165,485.92
NEXTDC Limited 7.57 22,354
$
169,219.78
Premier Investments Limited
15.8
1 10,752
$
169,989.12
Macquarie Group Limited
112.
77 1,471
$
165,884.67
Technology One Limited 5 30,612
$
153,060.00
Fisher & Paykel Healthcare
Corporation Limited
11.8
3 12,126
$
143,450.58

CASE STUDY IN FINANCE
4
ResMed Inc
13.5
5 12,500
$
169,375.00
$
1,136,465.07
Equity Shares – Short Sales
ANZ Banking Group 0.7 8,000
$
5,600.00
$
5,600.00
LICs and ETPs
WAM Capital Limited 2.37 72,533
$
171,903.21
SPDR S&P/ASX 200 LISTED
PROPERTY FUND
12.8
3 12,235
$
156,975.05
$
328,878.26
Hedged Position for ASX Equity
Investments
Invest in settlement account (Future
contract) 5 20,000
$
12,250.00
$
12,250.00
Cash Investment in Cash
Management Trust
Cash Holding (minimum requirement
$227,520)
$
277,571.51
Total
$
1,760,764.84
The calculation conducted in the above table relatively represents the changing
portfolio value from $1.5 million to $1.76 million within the time span of 3 months. During
the three month period the overall portfolio value relatively increased due to investments
conducted in particular stock. the overall portfolio relatively has stocks from the ASX 200
equity index, which eventually increases the overall returns from investment. The drafted
portfolio has performed adequately while providing higher rate of returns from investment.
Bhatta, Marshall and Thapa (2018) mentioned that with an adequate portfolio investor are
able to maximize the profit while minimising the chance of loss from investment. The above
creative portfolio relatively consists of stocks from equity which are bought and sold
simultaneously, while relevant purchase of future contract is also conducted with LICs and

CASE STUDY IN FINANCE
5
ETPs. The composition of the relevant stock and hedging position as a relatively allowed the
portfolio to outperform and maximize the profit from investment.
3. Mentioning the significance of the investment components used for the investment
purposes:
With the help of an adequate investment scope a Portfolio was created, which
relatively generated higher rate of returns from investment. The investment scope used during
the portfolio creation is the 10-day moving average and 50 day moving average crossovers.
This relatively helped in detecting the investment opportunities, which has an uptrend.
Moreover, the investments cooperatively help in identifying different stocks in the equity
market which could be used for investment purpose and generate higher rate of returns from
investment. From the evaluation it could be identified that during the three-month period
overall use of Technical Analysis was adequate, as the portfolio has generated adequate
Returns during the investment period. The portfolio has improved from the levels of 1.5
million to 1.76 million in a span of 3 months, which directly indicates the positive attributes
of the investment scope used during the portfolio creation. Therefore, the overall investment
scope used in the creation of the portfolio was relatively adequate, which would eventually
help in generating high rate of returns from investment. Moreover, with the help of technical
analysis investors able to detect investment opportunities and improve the returns from
investment. (Cao and Ward 2014)
4. Comparing and calculating the performance of the portfolio with the index ASX 200:
Particulars 23-02-18 15-05-18 Return
Portfolio Value
$
1,500,000.00 $ 1,760,764.84 17.38%
Index Value 5999.8 6097.8 1.63%

CASE STUDY IN FINANCE
6
The calculation conducted in the above table relatively compares the overall
performance of the portfolio with ASX 200 Index, which eventually help in detecting the
effectiveness of the creative portfolio. From the calculation it will be identified that the
portfolio provides the total return of 17.38%, while the index return is relatively at the levels
of 1.63%. The effectiveness of the portfolio is a relatively depicted as compared to the index,
which would eventually allow investors to generate higher rate of returns from investment.
During the three-month period the overall investment in the portfolio generated higher returns
of 17.38% due to the investment scope used in drafting the overall portfolio. In this context,
Dull, Konig and Ohls (2017) stated that investors with the help of effective portfolio is able
to maximise the level of returns, which could be generated from investment.
5. Providing adequate recommendation for the portfolio structure and depicting
whether any alternation is needed:
The portfolio created in the above assessment relatively in the case of positive
attribute to the investment score, which directly indicates the high returns that will be
generated from investment. The calculation directly indicates that no changes or alteration is
needed in the particular portfolio, as it has outperformed the market and generated higher rate
of returns from investment. The creative portfolio also allowed in segregating equity sector
with the futures market to maximize the level of process that will be generated from an
investment. Furthermore, the use of equity, shorting, and futures contract has allowed the
portfolio to generate higher returns of 17.38%. Hence, the created portfolio would eventually
help in generating higher rate of returns for investors while reducing the risk from
investment.

CASE STUDY IN FINANCE
7
Reference and Bibliography:
Au.finance.yahoo.com. (2018). Yahoo is now a part of Oath. [online] Available at:
https://au.finance.yahoo.com/ [Accessed 13 Jun. 2018].
Bhatia, A. and Kishor, N., 2015. Linkages of Foreign Portfolio Investments and Stock Market
Indices: Evidence from BRICS Nations. Journal of Poverty, Investment and
Development, 19, pp.1-21.
Bhatta, B., Marshall, A. and Thapa, C., 2018. Foreign bias in bond portfolio investments: the
role of economic and non-economic factors and the impact of the global financial and
sovereign debt crises. The European Journal of Finance, 24(7-8), pp.654-681.
Cao, X. and Ward, M.D., 2014. Do democracies attract portfolio investment? Transnational
portfolio investments modeled as dynamic network. International Interactions, 40(2),
pp.216-245.
Düll, R., König, F. and Ohls, J., 2017. On the exposure of insurance companies to sovereign
risk—Portfolio investments and market forces. Journal of Financial Stability, 31, pp.93-106.
Lahr, H. and Mina, A., 2016. Venture capital investments and the technological performance
of portfolio firms. Research Policy, 45(1), pp.303-318.
Lee, S., 2016. Geography of cross-border portfolio investments and ICT
diffusion. International Review of Economics & Finance, 45, pp.540-552.
Varughese, A. and Mathew, T., 2017. Asymmetric Volatility of the Indian Stock Market and
Foreign Portfolio Investments: An Empirical Study. Indian Journal of Finance, 11(6), pp.36-
49.