Performance Measures of Portfolio

Running Head: Performance Measures of Portfolio
PORTFOLIO INVESTMENT

Performance Measures of Portfolio 1
Introduction:
In this report, the economic and industry conditions of the Australian economy as a whole
and the equity market in particular have been discussed. Australian economy is quite
developed and it is also one of the largest economies with the mixed market industries. Till
2017 it has achieved a GDP of Australian dollars 1.69 trillion and also it ranks second
position as a wealthiest nation in the world.
Summary of Economic, global and industry environment
The economy of Australia is primarily dominated by the service sector and therefore almost
65% of total GDP of the country is generated through the service sector only. In the 10 years
from 1999 to 2008, prior to great recession, the GDP of Australian economy grew at the rate
of 3.4% on an average per year. In 2009, the economic growth rate had declined to 1.6% due
to global financial crisis but from 2010 to 2013, the economic performance of the Australian
economy has been improved. Due to this the GDP rate was averaged at 2.7%. The rate of
GDP has been fluctuating since last few years. In 2016, the rate was 2.65% which has
declined to 2.27% in year 2017. However, the GDP rate in year 2018 has increased to 2.96%.
This increase in the GDP rate is showing a positive sign of the sound economic condition of
the country’s economy as a whole. Even though the country has strong economic conditions
the global growth rate of the international monetary funds has been steadily downgrading
since 2015. In July 2015, the global growth rate was projected at 3.8% but has been actually
downgraded to 3.1% in October 2016 and also there were projections for 2017 at 3.6% but it
has been downgraded to 3.4% (Fatai, Oxley and Scrimgeour, 2004). Therefore, the
investment in these monetary funds must be reduced so as to optimise the overall the return
of overall portfolio investment.

Performance Measures of Portfolio 2
Source: [(Statista, 2018)]
Figure 1: Rate of GDP 2012-2022
The inflation rate in Australia has been continuously fluctuating in last 5 years. The average
rate of inflation in 2012 is 1.71% and therefrom it increased to 2.45% in year 2013 and 2.51%
in year 2014. Since 2015 the inflation rate declined to 1.51% and then in year 2016 it has
further declined to 1.25%. However, after 2017 the rate of inflation has increased to 1.97% in
year 2018. The increasing inflation in the prices of various commodities and services the total
income of the Australian citizens is weakening because of increased expenses. Driven by
higher fuel and other costs, the inflation rate in last 3 months has edged up. Due to the
increased inflation in the economy, the potential investors are running short of income
savings and hence they are not investing their funds in the shares and securities.

Performance Measures of Portfolio 3
Source: [(Statista, 2018)]
Figure 2: Inflation Rate: 2012-2022
The above data indicates that the Australian economy had to suffer immensely due to the
declining gross domestic product rate and increasing inflationary rate. But in year 2018 the
GDP rate has increased to 2.96%. Due to down gradation of GDP rates till 2015 the market
index of AXS 200 has also been reduced from 2014 to 2015. At the year- end 2014, the
market index was $ 5588.30 which got reduced to $ 4880.90 at the year-end 2015. However,
after, 2015 the market index of ASX 200 has increased to $ 5620.90 at the year-end 2016. In
year 2017 and 2018 also the market index has been increased due to increase in the GDP rate
of the Australian economy. The strengthening of market index of ASX 200 indicates that the
capital market of Australian economy is performing well by far.
BHP Billiton belongs to the industry that deals in global resources. It is indulged in the
business of producing various commodities such as iron ore, coal and copper. The prices of
BHP Billiton have been declining since last few years as the financial and operational
performance of the company is not sound. But, in the last 3 months, there has been