Management of International Finance

This article discusses the management of international finance, including the exchange of foreign currency and the acquisition of funds. It compares and contrasts tracker funds with active funds and analyzes the impact of COVID-19 on performance. Find study material and solved assignments on Desklib.

MANAGEMENT OF
INTERNATIONAL
FINANCE

Table of Contents
INTRODUCTION...........................................................................................................................1
MAIN BODY...................................................................................................................................1
Compare and contrast the tracker fund with active funds ...........................................................1
Identify the Tracker fund and analyse the analysis the impact of COVID-19 on the
performance.................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES ...............................................................................................................................7

INTRODUCTION
International finance management means management of the finance in the International
business environment, in simple terms exchange of the foreign currency in respect to making
money. They help organization in the international dealings with business partners such as
customers, suppliers and lenders. It is also used by government and non profit organizations,
through this concept company can easily do the acquisition of the funds because this helps in
generating funds from internal as well as external sources,their main goal is to organize funds at
the low cost. It also help in the investment decisions because in the acquired funds there is the
use of the funds in the optimum manner to increase the shareholder wealth. In this there is
different analytics is used for the analysing of the statement. It is the study of the monetary
transaction between one or more countries focus on the foreign direct investment and exchange
rates (Alzoubi, 2016) poverty, promoting the financial stability and economic growth. In simple
terms, it is used for the financial operations for compare the different international activities in
the industry. In this essay, there is the comparison of the tracker funds and active funds. Apart
from these there impact of Covid-19 on the performance of the fund.
MAIN BODY
Compare and contrast the tracker fund with active funds
In the organisation, both funds are important for measure the portfolio that in which
activity company have to invest its funds and used to read the market index. Tracker fund means
an index fund that is used to track the market index which is designed to attract the investors to
an entire index at low cost. They use the funds for measure the performance of the market index
to meet the fund objective. In the management of the tracker fund, this is done by duplicate the
performance of market Index. In this they track the broad market segment, this is worked in the
investing because invest in index fund id the form of passive investing which is use to provide
investor a low cost vehicle that allow clients to do exposure in the securities in the market. It is
also called index funds because it include many shares and stocks, it is calculated as an aggregate
of all performance of the shares. It also help in the immediate access for the entire range of
entity (Soltanizadeh and et.al. 2019).
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asset class
Desired
percentage assets
Current
percentage
desired
assets
differen
ce
S&P 500 ETF 25.00% 87,231 32.50% 80529 -6702
FTSE 250 UCITS ETF 30.00% 60,872 21.90% 67108 6236
FTSE 100 ETF 15.00% 58,894 22.70% 67108 8214
FT 30 index 25.00% 45,992 17.10% 40265 -5727
UK 100 index 5.00% 15,442 5.80% 13422 -2020
FTSE 350 UCITS ETF 100.00% 2,68,431 100.00% 268432
In the Active funds, it refers to the funds in which active fund manager makes decisions
for the investment of the funds money. They are important than the passive managed funds
because they beat the market index easily, there are various funds which provide huge returns but
performance of the funds change over time. It is very necessary to understand the fund before
investing. In this the of the manager is to choose the investment with the purpose of performance
that is used to remove the index. In this with the help of the analyst, they take the decision
regarding the buy and sell of the stocks to achieve the goals. In this manager make investment
with the main purpose of benchmark index. In this funds, active manager make profit through the
stock market through number of strategies, their main aim is to identify all stocks which are
trading at the low price (Bernon, Cullen, Jand Gors, 2016).
asset class
Desired
percentage assets
Current
percentage
desired
assets
differe
nce
Vanguard global
balance fund 30.00% 87231 32.50% 80529 -6702
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Vanguard global credit
bond fund 25.00% 60872 22.70% 67108 6236
Vanguard global equity
fund 25.00% 58894 21.90% 67108 8214
Vanguard global
emerging market funds 15.00% 45992 17.10% 40265 -5727
Vanguard global equity
income fund 5.00% 15442 5.80% 13422 -2020
100.00% 268431 100.00% 268432
Compare between active and passive funds
In this there is the difference between active and passive funds based on the different
approaches-
 In the active funds, investor is research and follow the industry data closely for the buy
and sell of the stocks based on the future. In this the approach is based on the typical
approach for the researchers and analyst because they devote more time in the trading and
research. In the tracker funds, investors buy a basket of the stocks through the market
index of the portfolio, they buy more or less regularly in the market. In this they follow
the approach of long term mindset that follow the market daily activities.
 In this manager of the active fund purchasing and selling every day based on the research
which is used for the stock to bushed the market averages. In the tracker fund, manager
use the present index in the market average for the large companies (Bird and
Mendenhall, 2016).
 In this both funds have different investment strategy because in the active fund manager
is experienced and make investment decision for the investment of the fund and in the
tracker fund they just follow the market index because there is no management team is
available.
 Pros and cons of both funds
Advantage of Tracker funds= It include low cost in creation of the portfolio, There is the large
number of assets in one purchase and disadvantages are it will never beat the market index and
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there is no one to make updates on the portfolio when the condition of market change
(Scarpellini, Valero-Gil and Portillo-Tarragona, 2016).
Advantage of active fund- In this manager have the track record for pushed the market, and
hey are ready to know the changes in the market, whereas the disadvantage is they
underperformed as compare to market index and there is high management fees is included in it
(George, and et.al., 2016)
In the market both funds are important for the growth over the long term because both are
depend on different factors. In the tracker funds, there is the comfortable retirement activities
with these funds. But in this all are dependable for long term, because if individuals have no time
for managed funds, there is no time and experience for this then tracker funds is appropriate
options. It is the best fund for the investors to invest in reliable stocks for the achievement of
financial goals (Moşteanu, Faccia and Cavaliere, 2020).
[ Source: Active fund, 2019]
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Illustration 1: Active fund. 2019.

[ Source: Tracker fund, 2020]
From the above graph it is represented that in active funds are higher in the equity market
and lower in the tracker market because of the following reasons in the market index in the
equity market funds.
Identify the Tracker fund and analyse the analysis the impact of COVID-19 on the performance
In the tracker fund, the most popular tracker fund available in the UK market is the SPDR
S&P 500 ETF(SPY). In the market the fund of 290 billion under the assets management. They
has expenses ratio is 0.08456%. As of October they had an average volume of 58.8 million
shares. On 23 October there is the return match with the S&P500 at 21.7%. Most of the
organization develop their own Fidelity Quality Factor to track the funds (Giannakisand
Papadopoulos, 2016).
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Illustration 2: Tracker fund. 2020.

It is the exchange traded funds which is used to trade the stock on the NYSE Arca under
the symbol. SPDR is known as Standard & Poor's Depositary Receipts, it is the former name of
the ETF. It is generally used to track the S&P500 stock market index. It is launched by the
Boston Asset manager State Street Global Advisors on 22 January,1993, the fund is traded first
on the market include the NEW STOCK EXCHANGE and American stock exchange. In this the
investment is caused by many factors such as economic and political developments, like change
in exchange rates, interest rates and the from the war and infectious diseases. It is also effected
by the portfolio which mean decrease in the portfolio help in remove from the Index. Investor
perception is based on the various unpredictable factors, economic and monetary and pandemic.
There is the outbreak is cause by the infection of Coronavirus that was first detected in China in
December 2019 and it is declared COVID-19 by the World Health Organizations in march 2020,
due to this there is restriction in the travel and closed of all businesses and international borders
also, the risk of the Covid-19 states to uncertainity and volatility. There is the slowdown in the
market index through this the performance of the ETF is fall from year to date performance when
US President Donald Trump declare a national emergency (Li, Kim, and Zhao, 2017).
ETF tracking is the biggest funds in the public market, it is used as an indicator to
measure the performance in the market index and focus on the two sector of exposure is
technology and healthcare. In the march due top coronavirus there is lowest point for the fund is
highlighted due to the impact of virus. In 23 march it hits the low price which is 31.37% decline
from the start of year. In this, there is decline in 7% at this time. In the US market interest rate is
also become low which make the US stocks also decline. Market is forward looking but due to
this disease economy get decline from the march because every things is closed down (Forcella
and Servet, 2016).
During the COVID-19 all over the world there is worst economy is developed and the
GDP of the country is decline because due to the death of more than 400000 peoples. Due to this
there is decline in the market of the US because every company shared is decrease from the
march to august only Informational technology shares is rising because there is the need of the
digital technology for the working online. There are many reasons for decline in stock price are
government guarantees, lower policy interest rates, because of high increase in the corona day by
day there is decrease in the funds of all the entity they have to take loan from the banks for the
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expansion which is not happen at this time. Due to this every individuals should have to use of
the appropriate protection kit and slowly slowly open of the shop and there is no gathering more
than 50 members at the party or any occasion. Investors of the common stocks incur more risks
then the right of the shareholder, they have a liquidation preference for the common stocks.
Banking stocks is mostly effects by this and many workers loss their jobs as the brokerage in the
stock exchange because prices are declining so no investor make invest in the funds for the
stocks at this time. Country can improve this condition by making vaccine as soon as possible
and increase the production of the goods by every industry and also there is the good quality
things is used by all of the population (Lyngstadaas and Berg, 2016).
Economic impact of the Covid- 19 is very harmful for the UK because it effect the
financial market, employment and number of funds which result is decrease in the funds. Due to
this there is negative impact on both funds tracker and active funds. In the UK economy contract
by 14%, the service sector include financial services, hospitality and tourism makes GDP of the
UK very low. In the UK, due to COVID- 19 GDP is 11.7% below in the February which rise by
6.6 % in June. By the rise in growth across manufacturing, services and construction. (Alyousef,
2016).
There are some feature of the security included-
 Low fees and expenses- The main feature of this is low expenses ratio and low expenses
which make the security popular because there is less brokerage is used in the stock
exchange.
 Trustworthy- In the UK, both active and tracker funds is trustworthy for all the security
like S&P 500 and FTSE 250 they provide right information regarding the security in the
right manner (Deering and Lang, 2017).
Portfolio Theory:
This theory is concerned with the risk and the return. In this the investors is concerned
with the expected value of securities. To maximized the expected value of portfolio one should
invest in one security. It helps in maximizing the return based on market risk . Investors are the
risk averse and always prefer less risky portfolio so that the loss is minimized. If the investors are
provided two portfolios and both of them having the same expected return they will choose the
less risky portfolio. If there is a high compensation then only the investors will choose the high
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risk. There are different forms of risk like Default risk which means they failed to pay the money
when it is expected, Income risk means the assets are fail to pay the returns, Capital risk is when
the nominal value is different from the expected risk. According to this theory there is a portfolio
frontier as the expected value helps in maximization the returns from each value. Trade-off
between all the investors will not same every individual evaluate the theory based on individual
risk and the characteristics. It helps in increasing the benefits which consider risk and return in
the investment. It helps in choosing the investment investment in the portfolio as in this theory
the markets are more reliable that the investors. The aim while choosing the investment is
efficient frontier which means that one should get the highest return when the risk and rewards
are balanced in a proper way. Their is an idea of diversification which means holding an
portfolio of the different classes is less risky then the holding the portfolio of the same assets.
Risk is different for different assets, different industries and for different markets.
CONCLUSION
From the above report it has been concluded that International finance management is
used for the Investment decisions for the allocating of the funds because through this company
can decide easily for investing the funds at the proper place. It also helps in making financial
decisions to make finance decisions for raise the funds to raise its optimum capital structure, it
also help in dividend decisions, they have to decide about the profit of the organization they have
to decide whether they have to pay to shareholder or retain in their company. In this they have to
decide the position of the concern and shareholder interest both. It is connected with many
activities such as arrangement if the resources like raw material, gods and services. It is different
in various country because of change in the currency. It is the main part of the financial
economies. In this essay, there is the description of the tracker fund and active fund of the stock
market. There is the properties of the security that is used for the fund. There is the identification
of the tracker fund in the UK market and the impact of the corona virus on the performance of
the funds.
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REFERENCES
Books and journals
Alzoubi, E .S. S., 2016. Audit quality and earnings management: evidence from Jordan.Journal
of Applied Accounting Research.
Bernon, M., Cullen, J. and Gors, J., 2016. Ownership structure and earnings management: evidence
from Jordan.international Journal of Accounting & Information Management.
Bird, A. and Mendenhall, M. E., 2016. From cross-cultural management to global leadership:
Evolution and adaptation.journal of World Business.51(1). pp.115-126.
George, G. and et.al., 2016. Bringing Africa in: Promising directions for management research.
Giannakis, M. and Papadopoulos, T., 2016. Supply chain sustainability: A risk management
approach.International Journal of Production Economics. 171. pp.455-470.
Li, J. J., Kim, W. G. and Zhao, X. R., 2017. Multilevel model of management support and casino
employee turnover intention.Tourism Management. 59. pp.193-204.
Lyngstadaas, H. and Berg, T., 2016. Working capital management: evidence from
Norway.International Journal of Managerial Finance.
Soltanizadeh, S. and et.al.,. Business strategy, enterprise risk management and organizational
performance.Management Research Review.
ONLINE
Tracker fund. 2020. [Online]. Availble through<
https://images.contentstack.io/v3/assets/blt4eb669caa7dc65b2/blt70a39c51d7a9fde0/5e
34a24d3bc6f018470a9760/2019-06-12-9113.jpg>
Active fund. 2019. [Online]. Available through
<https://www.calastone.com/wp-content/uploads/2019/07/chart-3-jul.png>]
Alyousef, H. S., 2016. A multimodal discourse analysis of international postgraduate business
students’ finance texts: an investigation of theme and information value. Social
Semiotics.26(5). pp.486-504.
Deering, D. and Lang, D. W., 2017. Responsibility center budgeting and management" lite" in
university finance: why is RCB/RCM never fully deployed?.Planning for Higher
Education. 45(3). p.94.
Forcella, D. and Servet, J. M., 2016. Finance as a common: From environmental management to
microfinance and back.Finance and Economy for Society: Integrating Sustainability,
pp.199-221.
Moşteanu, N. R., Faccia, A. and Cavaliere, L. P. L., 2020, August. Digitalization and green
economy-changes of business perspectives. In Proceedings of the 2020 4th
International Conference on Cloud and Big Data Computing(pp. 108-112).
Scarpellini, S., Valero-Gil, J. and Portillo-Tarragona, P., 2016. The “economic–finance
interface” for eco-innovation projects.International Journal of Project Management.
34(6). pp.1012-1025.
Online
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Tracker fund. 2020. [Online]. Availble through:<
https://images.contentstack.io/v3/assets/blt4eb669caa7dc65b2/blt70a39c51d7a9fde0/5e
34a24d3bc6f018470a9760/2019-06-12-9113.jpg>
Active fund. 2019. [Online]. Available through:
<https://www.calastone.com/wp-content/uploads/2019/07/chart-3-jul.png>]
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