Investment Management Portfolio: Aggressive Portfolio for £2 Million Funds

MSIN0082 Investment
Management
Type of Portfolio - aggressive portfolio

INTRODUCTION
Portfolio is the bundle of various stocks in the form of equity, preference, bonds or other assets
hold by an investor for future returns Bektic, 2018). The investor can be individuals, corporates,
firms etc. Investment management simply means assessing the performance of stocks for certain
period and accordingly modifying them in terms of sales or purchase that ultimately favours the
entity in terms of returns. It is important for the investor to give a close watch on their
investment fluctuations so that any downward deviation can be considered and immediate action
can be taken.
MAIN BODY
Portfolio considering Funds of Pound 2 Million
Portfolio
Company
Type of
Investment
Shares/Bonds/Mutual
Funds
Amount
Invested
Purchase
Price
Marks and
spencers Equity Share 5120 805376 157.3
Sainsberry Equity Share 1201 298688.7 248.7
Tesco Equity Share 406 111792.1 275.35
Coca Cola Equity Share 250 15642.5 62.57
Legal and General Bonds 200 1964 9.82
Fedelity Spicial Mutual Funds 513 9028.8 17.6
Cash funds NIL NIL 757507.9 Nil
Total Investment 2000000
Requirement and Preferences:
The requirement is to invest £ 2 Million in the stock market which the client holds. Out of
£ 2.0 million he inherited £ 1.0 million and remaining funds the client holds in the form
of bank balance in different saving accounts. Currently he does have any investment in
the form of security in stock market. His preference is to invest the funds for the period of
10 years considering the retirement age of 65 years.
Portfolio objectives & Investment strategy:
The objective of portfolio is to generate wealth for its investors through capital
appreciation in the security. These securities can be Equity shares, preference shares and
bonds (Clermont, 2020). There is different investment strategy in the market which can be
followed depending upon the ability of risk taken. The strategies adopted by the investor
can be passive and active strategy, Growth investing strategy in short and long term
investment, value investing strategy, income investing strategy and dividend growth
investing. These strategies are adopted by investors on the basis of risk and return and
portfolio they hold.

Risks that may affect the performance of the portfolio:
Risk can be divided into various types which affects the performance of portfolio such
market risk which is related to changes in market, Risk of inflation which affect the
purchasing power of consumer, Mortality risk which directly related to survival and
longitivity, Changes in the interest rate which creates the risk, and risk of liquidity which
is again important part of investment planning.
Portfolio composition and qualitative and quantitative reasons for composition:
The composition of the portfolio can be fully equity oriented securities and it can be the
mixture of debt, equity and other assets in the form of mutual funds. The advantage of
diversified portfolio is that the risk and return of different securities will get compensated
from each other and the net result will be net profit. Qualitative analysis means taking
deep study of the stock which is under consideration by ensuring its performance over the
years, reason for downfall etc. and quantitative aspects deals with quantity of units a
particular stock must be acquired in order to get desired return with considerable risk.
Selection and construction of an appropriate benchmark:
Benchmark is the measure which is used by various investors including individuals and
corporates in order to analyse the risk and return on the desired portfolio. The basic
intension is to analyse the performance of stock over the period of time. The standard can
be S&P 500, Barclays US aggregate bond index etc. These benchmark can be used to
amylase the performance of stock over the given period (Dhankar, 2019). The selection of
benchmark based on the class of asset which the portfolio matches to appropriate
benchmark. The example can be in S&P 500 which consist of large corporate of US, then
it will be taken as benchmark of Blue-chip companies who market capitalization is higher
as compare to others.
Portfolio’s historical performance, both absolute and relative to the benchmark:
Portfolio historical performance can be calculated by analysing the past trends in the
profits. Absolute return simply means what returned the portfolio get over the period of
time whereas relative return is the difference between market performance of security and
absolute return which is gauged by index and benchmark of the relevant security. The
another name of relative return is alpha.
Use & explanation of Financial calculations to support decisions & analysis:
Different models can be used in evaluating the performance of the return such as Gordens
dividend growth model, Capital asset pricing model etc. These models help the investor
to evaluate the performance of their portfolio theoretically. Further in order to calculate