Report on Investments and Portfolio Management

Running head: INVESTMENT & PORTFOLIO MANAGEMENT 1
Investments and portfolio management
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INVESTMENT & PORTFOLIO MANAGEMENT 2
Question 1
a) A stock index is the requirement of the valuation on the section of the stock market. It
usually is estimated from the prices for the chosen equities (Brooks, 2015). It is more of
the tool that is used by the investors as well as the financial manager to describe on the
market, through comparison of the return to the various investments.
In Australia the stock used is S&P/ASX franking credit adjusted indices. This kind of the indices
provide the measure of the Australian equities after tax performance (Bodie, Kane & Marcus,
2011). This usually help in the gauging of the tax-effectiveness of the tax-exempt as well as the
superannuation portfolios.
In the USA the benchmark index which is used is the Dow Jones Commercial Average. This
really is a weighted average of 30 significant stock which is exchanged on the New York Stock
Exchange as well as NASDAQ.
In Hong Cong the index which is used is the Hang Seng. This index usually record on the daily
changes particularly to the largest organization off the Hong Kong stock market. This normally
represent about 67% of the capitalization for the Hong Kong Stock exchanges (Willcocks, 2013).
In Japan the Index used is Nikkei index or even the Nikkei stock exchange. This is the stock
market index which is used for the Tokyo Stock Exchange (Bodie, Kane & Marcus, 2011). It is
generally the price-weighted index and these components are usually reviewed once every year.
In England the index used is FTSE 100, which is the market capitalization weighted index for the
one hundred England organization which are traded on the London Stock Exchange (Willcocks,
2013).

INVESTMENT & PORTFOLIO MANAGEMENT 3
In China the index which is used is the SSE composite which is the index which is for all the
listed stock at the Shanghai stock exchange (Brooks, 2015).
b) Major asset classes that are likely to feature in each of the types of managed funds.
a. Stable fund
The major asset class which this will likely feature is the defensive assets (fixed interest bonds)
(Willcocks, 2013). This assets is appealing alternative to the lower yielding vehicle such as the
money market funds for the portion of a given portfolio which is used to counter the volatility in
the market (Brooks, 2015). In most of the case this asset class contains the investment option
which are available mainly to the qualified retirement plans (Bodie, Kane & Marcus, 2011). It is
usually managed by the portfolio of the high rated corporation or even the government, the short
term as well as the intermediate terms bonds with the principal protection aligned to it by the life
insurance organization.
b. Balanced fund
The asset class for this fund is the equities. The balanced is the option for the intermediate-term
investor, they own both the stocks and the bonds. When it comes to this asset class the investor is
looking for a combination of the stock component, a bond component and sometime they could
look for the cash market element in the individual portfolio (Jordan, 2014). Furthermore, these
types of hybrid funds usually stick to the relatively fixed mixture of the stocks together with the
bonds which reflects either the moderate, or even the higher equity. The investors seeks out this
mixture of the safety, revenue and the modest capital appreciation. The quantity of this kind of
the mutual fund invests into both of the asset class need to stay within the list of the minimum as
well as the maximum (Jordan, 2014). Moreover, it is very important keep in mind that the asset
allocations family, the balanced funds’ portfolios would not change materially on their mix of