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Investment and Portfolio Management

   

Added on  2021-06-18

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Running head: INVESTMENT AND PORTFOLIO MANAGEMENTInvestment and portfolio managementUniversity NameStudent NameAuthors’ Note

2INVESTMENT AND PORTFOLIO MANAGEMENTAnswer to question 2.2:Vanguard MSCI Australian small companies index is an exchange traded fund thatintends to match the return in terms of capital appreciation and income of the MSCI small capindex Australian shares. The fund is a small capitalisation index that generally involvessmaller companies on the equity market of Australia that target coverage of around 14% offree float of market capitalisation of share market that is adjusted. Such return from fund isconsidered before the expenses, tax and fees are taken into consideration. The fund intends toprovide investors with diversified exposure and low cost to the small companies that is listedon stock exchange of Australia. This is indicative of the fact that investors are provided withthe low cost way for making investment in the portfolio of smallest companies of Australia.A sector in which the investment is made by the fund involves materials, industrial,financials, real estate, information technology, healthcare, Utilities, energy, consumer staplesand customer discretionary (Stettina and Hörz 2015). It can therefore be seen that the fundmakes investment in diversified sectors with maximum percentage of allocation made inmaterials sector and minimum allocation made in 1.2. A long term potential capital growth isoffered by the fund that can be typical to the market sector of small company. Objective and strategies of fund:The objective of fund is to track the appreciation of capita and income of the FTSEASFA Australia index high dividend yield. Most of the securities of fund will involve FTSEASFA Australia index high dividend yield that will allow weighting on individual security tovary marginally from index. In addition to this, investment in securities may be made by fundthat is expected to be included in the index it has been removed form index. The fundprovides investors with benefits of diversification, potential return that is tax effective, risksand potential of capital growth and income that is tax effective. Moreover, fund has potential

3INVESTMENT AND PORTFOLIO MANAGEMENTfor some loss of capital and generating returns that is below average with higher risk level.Investors are able to achieve broad range of diversification across multiple classes of assetswith exchange funds of lower class. A label fixed interest strategy is offered by fund thathelps in preservation of risk characteristics and diversification of varied range of assets bymaking investment in securities of higher grade (Klingebiel and Rammer 2014). Performance history of fund:Performance history:(Source: investsmart.com.au 2018)The above graph depicts that the performance of fund has improved over the years.The closing price of fund as on 5th May, 2018 stood at AUD 57.34 and has a share class sizeof 153.28.

4INVESTMENT AND PORTFOLIO MANAGEMENTPerformance of funds (Source: investsmart.com.au 2018)The above table depicts the performance of fund ranging from time period of 1 monthto 10 years. Growth of fund during the time period of one month was negative at -1.97 whilethat of five years growth stood at 3.09. Highest growth was recorded during six months andone year. Portfolio of assets incorporated into this particular fund comprises of top tenholdings namely Iluka resources Ltd, Star entertainment group limited, Spark Infrastructuregroup, Northern star resources limited, Evolution mining limited, ALS limited, AnsellLimited, Downer EDI Limited and Link Administration holding limited (DeFusco et al.2015). Dividend history of fund:

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