Developing an Investment Portfolio

Developing an
Investment Portfolio

Table of Contents
INTRODUCTION...........................................................................................................................1
PART 1............................................................................................................................................1
Formulation of Investment policy statement for Kooyong Lawn Tennis Club...........................1
PART 2............................................................................................................................................3
Capital allocation strategy of Kooyong Lawn Tennis Club........................................................3
PART 3............................................................................................................................................4
Preparation of portfolio that depicts the mix of capital allocation..............................................4
PART 4............................................................................................................................................6
Evaluation of ASX all ordinaries shares performance................................................................6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Investment portfolio can be defined as the collection of different types of financial assets
and instruments that are owned by an individual or a business entity (Investment management,
2017). Most of the portfolios are made up of various securities such as bonds, shares, debentures,
mutual funds, stocks, exchange traded and money market funds. Kooyong Lawn is a local tennis
club which is located in Melbourne and founded in year 1892. The management committee is
planning to make investment in share and asked to to build a portfolio of investments. For this
purpose, in this report various tasks are performed. These are preparation of investment policy
statement, determination of capital allocation strategy and selection of specific investment for
equity and debt. A report showing details of all the steps with time lines and tracking
performance of portfolio is also being generated under this assignment.
PART 1
Formulation of Investment policy statement for Kooyong Lawn Tennis Club
Kooyong Lawn is a tennis club which is mainly based in Melbourne Australia. Its
managing committee is currently planning to make investment in shares and other financial
instruments (Cao and Ward, 2014). It can help to achieve a higher return in future with the help
of an internet maximize account. The committee have asked to build a portfolio of finance and
also track the performance of it so that its success can be measured. The amount which has been
decided by Kooyong Lawn for the investment is $5,00,000. An investment policy statement for
the club is as follows:
Kooyong Lawn Tennis Club
Statement of Investment Policy
Purpose: The main purpose of this statement is to find the best options where the organisation
can make investment and attain higher returns. The aim behind investing in financial
instruments and shares is to enhance liquidity of the club. In this investment policy all the future
plans of Kooyong Lawn Tennis Club which is established in Australia are elaborated. When the
policies are framed then a copy of detailed statement is being distributed to all concerned
persons including managers, chief executive officers and other top authorities (Chandra, 2017).
Investment constraints: It consists detailed information of future plans of Kooyong Lawn
1

Tennis Club in which data regarding investments can be analysed. It focuses on following key
areas:
 Liquidity requirements: As Kooyong Lawn Tennis Club is planning to make
investment of $5,00,000 in financial instruments. It has planned to keep 15% of total
amount in cash and also decided that 5% of overall investment can be withdraw by the
club in future for different purposes such as renovation.
 Return requirements: The management committee of Kooyong Lawn Tennis Club has
decided to invest its money in financial instruments. The estimated rate of return for the
organisation is 5% on total investment in upcoming period.
 Risk tolerance: It is very important to make the such portfolio which contains low risk
so that business entities should make sure that investment is made with debased hazard
tolerance. In Kooyong Lawn Tennis Club the decision of keeping 15% of whole
investment in cash is being taken to reduce the risk as cash accounts are maintain with
zero to very low risk (Chaudhuri and Mukhopadhyay, 2014).
 Time horizon: The management committee is planning to make investment for a long
period as it may result in higher return in future for the organisation. Managers have
estimated that the time horizon for this particular investment is 12 years.
 Tax consideration: Kooyong Lawn Tennis Club is tax exempted by the government
hence it the investments that are going to be made by the organisation will be in such
financial instruments that are suitable for tax considerations of the club. It is very
important for the Kooyong to focus on all the tax exemption related considerations to
make legal and appropriate investment.
 Regulatory and legal considerations: There are various sector where making
investment is being declared illegal by the government. Kooyong follows all the rules,
regulations and requirements of legal authorities of Australia.
 Unique needs and circumstances: It has also been planned by the management
committee of Kooyong Lawn Tennis Club that it may withdraw 10% of total investment
in future in the condition of critical situations (Dodds, 2017).
Diversification: It is very important for the club to keep a detailed portfolio so that all the
members of top management can analyse overall potency of the organisation. Total investment
2