Portfolio Management of Dendy Park Tennis Club

Investment
Management

Table of Contents
INTRODUCTION...........................................................................................................................1
Part1 Preparation of investment policy statement...........................................................................1
Part 2 Capital Allocation Strategies.................................................................................................4
Part 3 Explanatory Statement for choosing specific investment.....................................................6
Part 4 Evaluation of performance of portfolio of Dendy Park Tennis Club....................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Portfolio is a grouping and investing in the financial assets like shares, bonds, currencies,
mutual funds etc. Every investment have characteristics of risk and return. The concept of risk is
intuitively understood by the investment. In managing the portfolio, investor must firstly select
the securities, construct the portfolio and then decide the weights of different constituent
securities in the portfolio. In this project, portfolio management of Dendy Park Tennis Club,
one of the best tennis club in Melbourne is discussed. This report is divided into four part. First
part contain preparation of investment policy statement. Second part contains capital allocation
strategy in equity, debt and cash, third task contain decision regarding specific investment for
equity and debt. Last task contains evaluation and comparison of weekly performance of the
portfolio of Dendy Park Tennis Club.
Part1 Preparation of investment policy statement
The investment policy statement is a written statement which is drafted between a person
who is managing the portfolio and a client that outlines general rules for the mangers (Stoughton
and Zechner, 2011). This statements contains the investment objectives and goals of a client and
also clarify the strategies that a portfolio manager should employ to achieve these investment
goals and objectives (Fabozzi and Markowitz, 2011). The budget decided by the management of
Dendy Park Tennis Club for the portfolio is $500,000. The investment policy statements of
Dendy Park Tennis Club are :
Dendy Park Tennis Club
Investment Policy Statement
Purpose:
This Investment Policy Statement aims to furnish the framework in relation to
investment objectives, policies and guidelines of Dendy Park Tennis Club, Bayside, Australia.
The purpose of investing in such instruments is to utilize the Club's funds in a the shares, debt
1

and money market securities so that it can maximise the profit of the company and increase the
net worth of the shareholder through diversification of asset class held by the club (Chandra,
2011). A copy of this statement will be furnished to all Investment managers of the company.
Investment Constraints:
The investment constraints of this policy contain the following areas: Liquidity Requirements: Dendy Park Tennis Club is a leasehold tennis facility with
limited financial pockets to expend on the facility such as renovations, constructions of
courts and other areas (Bayney and Chakravarti, 2012). The liquidity means how easy it
is to cash out of an investment. Before making decision for investment, Dendy Park
Tennis Club have to decide that how quickly they can sell their assets according to the
market changing conditions. The club has decided to increase their liquidity by keeping
aside $500,000 as investment budget for the portfolio. Risk Tolerance: A well-diversified investment portfolio is that which have a low risk
and have a perfect combination of the securities and its coefficient of covariance. Risk
tolerance means upto what level an investor can tolerate the risk in its portfolio.
Management of Dendy Park Tennis Club had evaluated its risk tolerance level and
accordingly framed its portfolio. Return Requirements: It is an essential part of the portfolio management. Decision of
investment is always be taking by considering the return requirement of the investor.
The assets will be invested, with prudence, to generate a dividend and interest income of
at least 5% to achieve the set goals and objectives of the club (Della Croce, 2012). Time Horizon: The Club is expected to operate on perpetual basis. For making any
investment it is important to decide the time horizon. In this portfolio 5 year time
horizon is taken for the shares and debenture and 3 months time horizon is taken for the
money market securities like commercial paper etc. An appropriation will be made for
2