Portfolio Management and Theory

This report focuses on identifying the overall portfolio for Jack and Gloria, which could help them through the superannuation period. The investment policy statement of Jack and Gloria is mainly conducted in the assessment to identify the return and risk attributes of the individuals. The analysis of different sectors of ASX index is conducted, which relatively helps in identifying the stocks that could be taken into consideration for improving profitability of the superannuation fund. The advantages and disadvantages of momentum analysis is also conducted to identify the minimum level of returns that could be generated from an investment.

Running head: PORTFOLIO MANAGEMENT AND THEORY
Portfolio Management and Theory
Name of the Student:
Name of the University:
Authors Note:

PORTFOLIO MANAGEMENT AND THEORY
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Table of Contents
Executive Summary:..................................................................................................................3
Introduction:...............................................................................................................................4
Part 1 Investment policy Statement:..........................................................................................4
1.1 Return objective:..................................................................................................................4
1.2 Risk objective:......................................................................................................................5
1.3 Investment constraints:.........................................................................................................5
1.4 Standards for performance evaluation:................................................................................6
1.5 Analysis of market indices:..................................................................................................6
1.5.1 Providing summary statistics and analysing the performance, while discussing the role
of each asset class:.....................................................................................................................6
1.5.2 Evaluating the risk and return provisions of the security market indices:........................7
1.6 Recommendations:...............................................................................................................9
Part 2 Active Portfolio:..............................................................................................................9
2.1 Research on momentum strategies:......................................................................................9
2.2 Portfolio construction:........................................................................................................11
2.3 Analysis of the portfolio performance:..............................................................................14
2.3.1 Identifying whether winner stock outperform past loser stocks on average:..................14
2.3.2 Stating whether winner stock outperform average return of the 100 stocks:..................14
2.3.3 Recommending whether momentum strategy is good based on the analysis:................15
2.3.4 Changing he weightage calculation for detecting the change in performance of the
portfolio:...................................................................................................................................15
Part 3 Top-Down Analysis:......................................................................................................17
3.1 Economic Analysis:...........................................................................................................17
3.2 Industry Analysis:..............................................................................................................19

PORTFOLIO MANAGEMENT AND THEORY
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3.3 Security Outlook:...............................................................................................................21
Conclusion:..............................................................................................................................22
Reference and Bibliography:....................................................................................................24

PORTFOLIO MANAGEMENT AND THEORY
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Executive Summary:
The report directly focuses on detecting the adequate portfolio for Jack and Gloria, which
could eventually help them to generate higher rate of returns from investment to support their
retirement expenses. the relevant evaluation is conducted on different risk and return
attributes of Gloria and Jack to identify the minimum returns requirement and risk viability to
support the investment scope. the analysis of different sectors of ASX index is conducted,
which relatively helps in identifying the stocks that could be taken into consideration for
improving profitability of the superannuation fund. The advantages and disadvantages of
momentum analysis is also conducted to identify the minimum level of returns that could be
generated from an investment. however, the analysis of momentum trading strategy depicted
a negative Outlook, which relatively indicates that the ignorance of the trading strategy is
much more profitable for the investors, as it does not evaluate the stocks on the basis of
value. The different significant valuation of the momentum analysis is being conducted by
deriving different portfolios, which could support the recommendations for Jack and Gloria.
Furthermore, the evaluation of Telstra and AGL with the industry and country analysis
relatively indicate a low investment opportunity for the investors on the companies due to the
high volatility in effective. This relatively represents that ignoring the current investments
and energy and telecommunication sector would eventually allow the investors to generate
higher rate of returns from investment.

PORTFOLIO MANAGEMENT AND THEORY
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Introduction:
The overall assessment focuses on identifying the overall portfolio for Jack and
Gloria, which could help them through the superannuation period. In addition, the investment
policy statement of Jack and Gloria is mainly conducted in the assessment to identify the
return and risk attributes of the individuals. In addition, the evaluation of investment return is
conducted while identifying the standard got performance evaluation. Moreover, analysis of
the market indices is conducted to identify the performance of different asset classes listed in
ASX index. The portfolio construction is also conducted with the help of momentum analysis
to identify the best possible investment stocks for Jack and Gloria. Lastly, the security
analysis is mainly conducted on Telstra and AGL, while evaluating the economic and sundry
conduction in which the organisation was operating.
Part 1 Investment policy Statement:
1.1 Return objective:
The main objective of the investment policy statement is to generate adequate return
for supporting the retirement fund of Jack and Gloria. In addition, Jack and Gloria wants to
grow their current superannuation fund by inputting new financial instruments that is present
within the Australian stock market. The return needs to be calculated based on expenses,
which will Jack and Gloria incur after the retirement. The main retirement age for both the
couples is at the age of 65 years, where there will be no expenses regarding Mortgage
payments, as the loan would eventually mature in 30 years. The minimum return of $18,000
needs to be earned by the couple for supporting their expenses after retirement.

PORTFOLIO MANAGEMENT AND THEORY
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1.2 Risk objective:
The current superannuation portfolio that is maintained by Andrews is a Growth
Fund, which relatively increases the returns and grows portfolio fund in future. This
maintenance of Growth Fund mainly forces the individual to invest 85% of the overall
investments in growth assets, while the 15% will be invested in defensive assets. This
composition of the Growth Fund would eventually help in minimizing the risk attributes of
the portfolio. Moreover, the use of Growth Fund could eventually allow the couple to
generate the required funds to support their expenses after retirement.
1.3 Investment constraints:
Particulars Amount
After-tax salary per year $ 100,000.00
Living expenses per month $ 36,000.00
Term deposit per month $ 12,000.00
Payment per month $ 39,918.15
Total annual income $ 12,081.85
The above table relatively represents the annual income of Jack and Gloria after
conducting all the expenses. Therefore, an investment of $12,000 needs to be conducted by
Jake and Gloria every year to generate adequate returns for supporting their retirement
expenses. Moreover, investment needs to be conducted on 85% growth stocks and 15%
defensive stocks such as bonds and fixed deposits.

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1.4 Standards for performance evaluation:
After identifying the return address requirements of Jake and Gloria the overall
standard performance evaluation can be identified. The portfolio that needs be created for the
couple will provide Adequate Returns, which would eventually help in growing the portfolio
value. The stocks selected for the portfolio needs to provide a continuous growth and return,
which is why the momentum analysis is needed. This would eventually segregate the stocks
that have Momentum with the stocks that do not have Momentum in their price action. The
stocks with positive Momentum will mainly be added to the portfolio for generating higher
rate of returns from investment.
1.5 Analysis of market indices:
1.5.1 Providing summary statistics and analysing the performance, while discussing the
role of each asset class:
Asset Returns
ASX200I(PI) 0.53%
ASXM50I(PI) 0.65%
ASG2PT1(PI) 0.14%
S&PCOMP(PI)~A$ 0.64%
BMAU03Y(RY) 5.12%
BMAU07Y(RY) 5.47%
GSAUD3M(IR) 4.81%
USBDS5Y(RY) 3.66%
USBD10Y(RY) 4.25%

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And the overall evaluation performance of S&PCOMP(PI)~A$, ASXM50I(PI) and
ASX200I(PI) is identified to be the highest among the Asset class. However, the equity
section and bond section are a relevant part of the portfolio, as it helps in divesting the risky
stocks, while improving the returns from investment. Equity class a relatively provides high
growth and return generation capacity to the investors while having higher risk involvement
in Investments. However, the bond and treasury class a relatively provide a stable returns
with no risk, which in turn helps the investors to minimize the risk in their portfolio while
generating higher returns from investment (Szego, 2014).
1.5.2 Evaluating the risk and return provisions of the security market indices:
Particulars ASX200I(PI) ASXM50I(PI) ASG2PT1(PI) S&PCOMP(PI)~A$
Average return 0.53% 0.65% 0.14% 0.64%
HPR 291.54% 416.63% 3.83% 445.60%
From the valuation of the above table the relevant returns provided by the four index
could be identified. This average return calculation relatively helps in detecting the
possibility of returns that could be generated from the index and the stocks comprising the
index returns. From the evaluation ASXM50I is identified to have the highest average returns
from investment, which could increase the return generation capability of the portfolio. the
stocks of S&PCOMP could also be included in the portfolio as it provides the second highest
Returns. However, ignoring the stocks listed in ASG2PTI would be beneficial for the
portfolio, as it provides the least returns from the evaluation. From the valuation it could be
identified that US equities an Australian equities index is providing the highest returns from
the capital market, which would eventually help the couple to generate higher returns from
investment (Moustafaev, 2016).

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Australian equities and US equity index directly holds the shares related to large cap
stocks, which could eventually help in growing the portfolio of the investors. The selection of
stocks from the Australian equities and US Equities would eventually allow the investment
portfolio to grow adequately in near future. However, the investment in ASX 200 REITS
would not be beneficial for the investment portfolio, as it provides the least return from other
investment schemes. Therefore, investment in ASXM50I and S&PCOMP would be the most
beneficial for the portfolio.
Particulars BMAU03Y(R
Y)
BMAU07Y(R
Y)
GSAUD3M(I
R)
USBDS5Y(R
Y)
USBD10Y(R
Y)
Average
return
5.12% 5.47% 4.81% 3.66% 4.25%
The above table relatively depicts the average return of Bond and treasury notes listed
in the Australian market, which could help in generating a constant return from investment.
However, the growth prospectus in the bond and treasury notes to the relatively low as it
provides a minimum return from investment. the bond and treasury market relatively provide
a stagnant return from investment over the period of 3, 5, 7 and 10 years. Therefore, from the
evaluation could be understood that the investments conducted in the Bond and treasury note
would not provide the portfolio with adequate returns which is intended by Jade and Claire
after the retirement. Bond and treasury note asset class does not provide adequate returns for
the portfolio, as it fixes annual returns that could be generated by an investment. This class of
investment would not be beneficial for the portfolio to obtain the growth fund, which is
required by the couple (Klingebiel & Rammer, 2014).
Particulars ASX200I(PI) ASXM50I(PI) ASG2PT1(PI) S&PCOMP(PI)~A$

PORTFOLIO MANAGEMENT AND THEORY
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Standard deviation 3.93% 4.42% 4.77% 3.91%
The above table collectively represents the standard deviation of the four-different
asset class that could be used in formulating the portfolio of Jake and Claire. the overall risk
assessment relatively indicates that S&PCOMP has the lowest risk attributes from investment
following the ASX200I and ASXM50I, which could be used to formulate the portfolio that
would obtain high growth rate in future. However, ASG2PTI has the highest risk attributes
from investment, which needs to be ignored during the formulation of the portfolio.
Therefore, the use of stocks from ASX200I and ASXM50I and S&PCOMP would eventually
allow Jake and Claire to generate the adequate returns from investment to support the Growth
Fund. The bond and treasury section does not have any kind of risk involved in investment,
as it is the risk-free investment (Lynn & Hao, 2015).
1.6 Recommendations:
Therefore, with the combination of ASX200I and ASXM50I and S&PCOMP
comprising 85% of the portfolio with ASXM50I(PI) and ASG2PTI(PI) comprising the rest
15% Jake and Clare to get their growth fund, which might generate exponential returns. This
comprised portfolio could allow Jake and Clair to generate adequate returns to support their
expenses after the retirement.
Part 2 Active Portfolio:
2.1 Research on momentum strategies:
Investors use the investment strategy to detect the overall trend of the market, which
might eventually help in improving the returns that could be generated from investment.

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Moreover, the momentum investing strategy directly involve long term trading provisions,
which needs to be conducted by individuals to generate higher rate of return from investment.
The strategy relatively focuses on identifying the upper trending stocks, which could be used
during the portfolio creation. However, the momentum strategy does not provide adequate
knowledge regarding the risk and return attributes of the stock, which can be identified as its
major disadvantage. Moreover, the investment strategy Relatively focuses on establishing or
detecting a relevant Trend which could be used in maximizing the profits of the investors
(Asparouhova et al., 2014).
Moreover, with the help of momentum investing strategy investors can detect price
movement is for the trend moving gives the trend identified by the strategy. this relatively
close the investors to detect major reversals, which could reduce the losses from investment,
while providing an adequate investment opportunity to the investors. Moreover, Momentum
is identified to be a short-term strategy indicator, which relatively focuses on short duration
of historical price to determine the actual and current position of the stocks. Furthermore,
Momentum strategy is not concerned with the operational performance of the stock it directly
focuses on the changing trend value of a stock to determine the investment opportunity. In
addition, the momentum strategy can be identified as an indicator which thrives on investor
emotions, which would eventually help in detecting the investment opportunity for the
investors (Stettina & Horz, 2015).
The momentum trading utilizes changes in price which is conducted by stocks
overtime, while providing an adequate investment opportunity to the investors. the evaluation
of price change is derived by moving averages, which could eventually help investors in
detecting the trend of the stock. this trend detection is the momentum indicator which allows
investors to identify whether the trend is positive or negative. Investors utilize the

PORTFOLIO MANAGEMENT AND THEORY
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information for short term trades and identify major reversals, which could provide the
maximum returns from their investment (Gutiérrez & Magnusson, 2014).
2.2 Portfolio construction:
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
Portfolio 1 Average Returns
Jun-06
Dec-06
Jun-07
Dec-07
Jun-08
Dec-08
Jun-09
Dec-09
Jun-10
Dec-10
Jun-11
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
Portfolio 2 Average Returns

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
Portfolio 3 Average Returns
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
-6.00%
-4.00%
-2.00%
0.00%
2.00%
4.00%
6.00%
Portfolio 4 Average Returns
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
-4.00%
-3.00%
-2.00%
-1.00%
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
Portfolio 5 Average Returns

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The above figures relatively represent the five-different portfolio returns, which is
generated from 2005 to 2016. the combination of the returns relatively depicts the overall
benefits or profits that could be generated by the portfolio to the investor. Furthermore, the
graphical representation depicts the volatile returns that is presented by the portfolio
constructed for investment purposes.
Month Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4 Portfolio 5 Total
Dec-06 (16.6081) 7.0443 2.8374 1.6250 0.8286 2.4617
Jun-07 0.9845 0.6964 1.4909 0.5284 1.1907 0.9517
Dec-07 (0.7241) (2.3997) (0.3866) (2.7138) (1.1661) (1.2089)
Jun-08 1.1079 0.3623 3.0662 0.7583 0.7908 0.9152
Dec-08 (0.4173) (0.5345) (0.4092) (0.3388) (0.6314) (0.4448)
Jun-09 3.5276 5.1169 2.6255 4.6615 2.2552 3.3987
Dec-09 (0.3459) (0.4816) (0.3573) (0.2838) (0.3896) (0.3695)
Jun-10 (1.2958) (1.1385) (1.3308) (1.2825) (1.8975) (1.3523)
Dec-10 0.2337 0.0088 (0.5092) (0.2289) (0.3163) (0.1854)
Jun-11 (0.8301) (54.5422) 1.0660 3.2301 1.8838 2.8229
Dec-11 (1.5331) (0.4171) (0.5789) (0.4280) 0.0677 (0.3940)
Jun-12 4.3176 4.9832 3.1480 5.4044 (41.4147) 6.3682
Dec-12 0.5644 0.4706 0.7111 0.3219 0.4950 0.4965
Jun-13 2.1567 1.7319 1.4237 1.9544 1.0395 1.5658
Dec-13 0.2320 0.8152 0.1903 0.5360 0.5571 0.4507
Jun-14 0.7551 0.3030 (0.8885) 1.6673 1.7571 0.8848
Dec-14 (0.0562) 2.7169 0.0293 0.9941 0.5815 0.9903
Jun-15 (54.8212) 0.0917 (112.5018) (0.4332) 0.0772 0.4788
Dec-15 1.1084 (0.0340) 1.7037 (1.3167) 20.8584 3.1880

PORTFOLIO MANAGEMENT AND THEORY
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Jun-16 0.8491 (545.7905) 1.1969 2.4623 0.7326 1.5435
2.3 Analysis of the portfolio performance:
2.3.1 Identifying whether winner stock outperform past loser stocks on average:
From the overall evaluation the winner’s stocks did not outperform the losers stock
during the fading period of 10 years, which could eventually indicate the low reliability of the
momentum indicator. Moreover, the ending value of loser stocks was at the levels of 0.8491
while the winner stock value was at the levels of 0.732, which is relatively lower and
indicates the loopholes in momentum strategy. Furthermore, the analysis also indicates that
the relevant profitability of both the strategy was not adequate to generate a higher return
from the investment of $1. Therefore, both the strategy would provide losses to the investor,
which hampering the investment capital. In this context, Rank, Unger & Gemunden (2015)
stated that investors utilize the trading indicators to identify trends, which could eventually
help in improving their trading profitability for short duration.
2.3.2 Stating whether winner stock outperform average return of the 100 stocks:
The evaluation of the calculations also indicates that the winner’s talks did not
outperform the 100 stocks portfolio, as the returns provided by the hundred-stock portfolio is
relatively higher. the hundred-stock portfolio mainly provides the last return of 1.5425, while
the winner stocks provided or return of 0.8491, which is a relatively lower and would not
provide investors with higher rate of return. Therefore, it could be said that the hundred
stocks would eventually provide a higher rate of return due to the diversification of the
stocks. Kock, Heising & Gemünden (2015) argued that without adequate investigation and

PORTFOLIO MANAGEMENT AND THEORY
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research investors are not able to Improve the level of returns that could be generated from
investment, while anticipating the risk from an investment.
2.3.3 Recommending whether momentum strategy is good based on the analysis:
From the overall evaluation that could be identified that Momentum strategy is not the
best possible way for creating a Portfolio and maintaining it throughout the long-term
phase. Moreover, the momentum strategy was not able to identify stocks that could generate a
relevant return from investment on a constant basis, while it only provided stocks that have a
relevant Trend. Therefore, investing reboot full you based on momentum strategy would not
be feasible for the investors, as relevant changes in the portfolio needs to be conducted for the
period due to the change in momentum trend of stocks. This would eventually increase
problems for investor while raising the level of transaction charges for the individual.
Therefore, Momentum strategy needs to be ignored by the investors as it is an indicator
which only focuses on trend analysis and does not provide the actual value of the stock. On
the other hand, if investors use value analysis such as dividend discount model or Fama
French model, then the return generation capability of the portfolio relatively increases.
2.3.4 Changing he weightage calculation for detecting the change in performance of the
portfolio:
Month Portfolio 1 Portfolio 2 Portfolio 3 Portfolio 4 Portfolio 5
Dec-06 6.9040 1.3805 1.9678 0.5956 0.7537
Jun-07 0.4438 1.0201 1.3980 0.5612 0.8771
Dec-07 (1.5699) (1.1435) 0.3959 (2.2479) (1.8459)
Jun-08 0.1851 0.6686 (5.0540) 0.7491 0.4166
Dec-08 (3.0711) (0.4350) (0.2906) (1.0312) (0.6771)

PORTFOLIO MANAGEMENT AND THEORY
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Jun-09 1.4661 4.2417 2.1695 2.0329 4.7321
Dec-09 0.0801 (0.0680) (0.5343) (0.0064) (0.2711)
Jun-10 2.9331 (10.7639) (0.9437) (71.1760) (4.3859)
Dec-10 2.3031 0.9130 (1.6346) (0.3070) 0.2027
Jun-11 (0.9084) 0.1321 1.3521 4.5767 0.1616
Dec-11 (0.7112) 6.2562 0.2482 0.4620 (0.5816)
Jun-12 3.6303 1.1770 (5.1986) (4.4246) (49.1243)
Dec-12 0.4446 0.8214 0.6059 0.4472 0.9436
Jun-13 1.1941 0.5378 0.8116 1.4369 0.5964
Dec-13 0.6641 2.1947 0.1475 1.0697 0.6560
Jun-14 0.5415 0.5060 2.3863 0.7284 2.1059
Dec-14 0.1980 1.8383 (2.9124) 0.4835 0.4572
Jun-15 6.5504 0.6173 (1.3056) (0.7472) 0.8904
Dec-15 2.6848 1.9824 0.9328 (3.7571) 2.0038
Jun-16 1.0612 0.8654 1.1512 1.2526 0.6722
After changing weights of the portfolio, the overall rate of return that could be
provided by the stocks has a relatively changed, which directly indicates the significance of
weights in formulating a Portfolio. The above table relatively represents the overall returns
that could be generated from portfolio 1 to portfolio 5 during the period of the analysis if
relevant changes in the weights can be conducted. therefore, it could be stated that with the
changes in be your all photo you can be created with the help of momentum trading to
improve the returns from investment. However, the determination of the ways is relatively
the main factor which might affect the profitability and reliability of the investment. Hence,

PORTFOLIO MANAGEMENT AND THEORY
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the momentum strategy does not provide adequate returns from investment, while hampering
the profits, which could be generated overtime.
Part 3 Top-Down Analysis:
3.1 Economic Analysis:
The economic analysis of Australia is relatively positive as the overall GDP and
capital market of the country is relatively growing. The overall progress can be evaluated
from the following analysis of Australian index and GDP.
Figure 1: Depicting the growth of Australian capital market
(Source:)

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From the valuation it could be identified that after 2009 new road progress of the
Australian market could be seen, which might eventually help the investors to generate higher
rate of returns from investment, Moreover the evaluation directly indicates growth in the
index for past 5 years, which relatively allowed the investors to generate higher rate of
returns from investment. Therefore, it could be understood that the current economic position
in Australia as a relatively positive, which would eventually benefit investors as the capital
market is generating higher value on each trading day.
Figure 2: Depicting the GDP of Australia
(Source: tradingeconomics.com, 2018)
The above figure relatively represents the overall GDP of Australia which has a
relatively improved over the period of 10 fiscal years. This effectively indicates that the GDP
value of Australia as a relatively increased, which portrays the positive attributes of its
economic condition. Therefore, it could be identified that investments in Australian market
would eventually provide fruitful returns to the investors due to the positive economic and
capital market condition of the country.

PORTFOLIO MANAGEMENT AND THEORY
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3.2 Industry Analysis:
Figure 3: Depicting the ASX energy sector analysis of Australia for past 5 years
(Source: Asia.spindices.com, 2018)
The above chart represents the industry analysis of energy sector, where AGL
company stocks are enlisted. The evaluation of the energy sector relatively indicates that the
industry is not providing adequate returns to the investors due to the continuous decline in its
share price. Therefore, from the valuation it could be identified that currently the energy
sector is not able to provide adequate returns to the investors while in energy stock would be
a highly risky endeavor for the investors.

PORTFOLIO MANAGEMENT AND THEORY
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Figure 4: Depicting the ASX telecommunication sector analysis of Australia for past 5
years
(Source: Asia.spindices.com, 2018)
The evaluation of Telecommunication sector also provides a negative Returns in the
five-year duration, as the value of the sector is declining year by year where are the five-year
annual returns has provided for negative -7.59%. This relatively indicates that investments in
the telecommunication sector would eventually increase the risk and losses for the investors
due to the continuous decline and its share price. Therefore, the industry analysis would
relatively indicate that investors should ignore stocks that are supported by
telecommunication services.

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And from the evaluation of both the energy sector and telecommunication sector it
could be identified that investment in both the category would directly increase the score of
the investors. In addition, the losses that could in by the investor would eventually increase
adequate investments are conducted in telecommunication and energy sector therefore
investors should ignore the stocks related to the Sector to improve its return and reduce the
risk from the portfolio.
3.3 Security Outlook:
Particulars Telstra AGL
Average return 5.1406 18.7602
Dividend yield 6.87 4.76
PE 10.4 17.2
The above table represents the average Returns, dividend yield, and the ratio of
Telstra and AGL, which could help in identifying the current position of the company. From
the overall evaluation it could be detected that Telstra does not provide an adequate higher
rate of returns from investment, while its dividend yield is relevantly high with a lower
period. This indicates that Telstra is able to provide a higher rate of dividend to its investors
on yearly basis, which would eventually allow investors to increase the returns from
investment. Moreover, the PE ratio of 10 star is a relatively lower which directly indicates
that there is possibility of higher growth in the share price. However, the average returns
provided by Telstra from its price movement is relatively at the levels of 5.1406, which can
be considered an adequate investment opportunity that could generate higher rate of returns
from investment (Kaiser, Arbi & Ahlemann, 2015).

PORTFOLIO MANAGEMENT AND THEORY
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The above calculation also evaluates the performance of AGL, which could help in
generating higher rate of returns from investment. The average returns provided by the
company is at the levels of 18.7602, which is relatively higher for the investors who is willing
to increase value of its Portfolio. Furthermore, the dividend yield of the company is relatively
at the levels of 4.76 which indicate a profitable position for the investors who can generate
higher rate of returns from investment. However, PE ratio of the company is relatively high,
which indicates a short-term decline in share value, which could directly hamper the overall
portfolio value due to the declining share value of the company (Chandra, 2017).
The declining outlook of the industry can be witnessed in which Telstra and AGL is
operating, which relatively indicates the overall unstable position of the companies over the
period of 4 years. The industry analysis relatively indicates a negative trend where the sector
index is relatively losing value over the period, while increasing the risk reducing the overall
returns from investment. on the other hand, the country analysis represents a positive attribute
of Australia, which would eventually help investors in generating higher rate of returns from
investment. the current ASX index Is trending positive while providing hair growth in current
year after the recession, while the overall GDP of the country is a relatively improving over
the period of 10 fiscal years. this relatively indicates the positive attributes of investing in
Australian stock market, which could all investors to generate higher rate of returns from
investment. However, the current industry analysis depicts a negative trend, which might
hamper the overall profitability of the investors if investing is conducted in Energy sector and
Telecommunication service sector (Heding, Knudtzen & Bjerre, 2015).
Conclusion:
The overall assessment focuses on identifying the significance of trading and the
measures, which could be used for minimizing the risk from return. However, the output

PORTFOLIO MANAGEMENT AND THEORY
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identified from the above the assessment relatively indicates the problems that is situated
with Momentum investment strategy, which does not provide adequate leverage to the
investors. Moreover, the portfolio created for the evaluation depicted the losses, which would
be incurred by the investor due to the high volatility in investment. This evaluation relatively
indicate that investors needs to conduct different level of analysis before conducting
investment in stock market, as the investment could provide high risk and low returns from
investment. the economic analysis, industry analysis, and company analysis is conducted to
identify the viability of the investments in Australia. This macro analysis would eventually
help in identifying the current investment position of the market, which could generate a
higher rate of returns from investment.

PORTFOLIO MANAGEMENT AND THEORY
24
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