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Portfolio Development: A Case Study in Finance

   

Added on  2020-03-04

9 Pages2003 Words374 Views
Case study in Finance

TABLE OF CONTENTSIntroduction................................................................................................................................3Analysis......................................................................................................................................3Explanation of investment philosophy and strategy for the development of portfolio..........3Description of portfolio components.....................................................................................4Selected companies for direct investment..............................................................................4Explanation Regarding the Manner in which Investment Component Aligns With OverallInvestment Strategy................................................................................................................5Listed investment companies.............................................................................................5Investment in equity options..............................................................................................6Cash reserves......................................................................................................................6Conclusion & recommendation..................................................................................................7References..................................................................................................................................8Appendices.................................................................................................................................9

INTRODUCTIONInvestment Philosophy and Processes are applied by the organization for achievingthe following goals such as understanding the behaviour of investor, managing investorexpectations, developing the procedure to be applied in Investment Portfolio (Achillas andet.al, 2015). Present report revolves around explanation relating to Investment Philosophyand Strategy in the case when investor have a high level of risk tolerance and an interestedinvesting major portion of the investment in individual equity securities. The furtherpresentation has been provided in the manner in which investment should be made inaccordance with specified nature of the investment. The report ends up with the explanationregarding the manner in which investment component aligns with the overall strategy.ANALYSISExplanation of investment philosophy and strategy for the development of portfolioPortfolio management strategy assists in increasing profits by managing risk andrequired returns (Powell, 2015). A forceful strategy of investment force capital approval as achief objective of investment, instead of principle’s income or safety.Aggressive strategies of investment are appropriate in the current situation. It isbecause their extended prospect of investment allows them to persist fluctuation in the marketfar better for short prospects of horizons by investors (Walker, 2014). In the present scenario,as the client is having high-risk tolerance and interested in investing a major portion of theinvestment in the equity of high cap companies (Bodie, Kane and Marcus, 2014). Thus,aggressive investment philosophy strategy will be applied for constructing the portfolio. Byapplying the same, the expected objectives will be achieved in an appropriate manner.Further, capital growth strategy will also be applied as it assists in maintaining the goal ofcapital growth which consists mainly of equities (Gründl and Gal, 2016). Active managementis required by aggressive strategies of investment rather than conservatives, as it is possible toget more unstable and requires constant adjustment to cope up with changing conditions ofthe market. Regular rebalancing is also needed to maintain allocations of the portfolio to theirlevels of the target (Yang, Narayanan and De Carolis, 2014). Thus, by applying the abovephilosophy strategies, investors will be able to attain expected gains.

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