Mutual Fund Investment Strategy Analysis
Added on 2020-02-03
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CASE STUDY
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................3Answer 1..........................................................................................................................................3Answer 2..........................................................................................................................................5Answer 3..........................................................................................................................................7(A) Return...............................................................................................................................7(B) Analyze individual level of risk.......................................................................................8© Profitability of investment in long run...............................................................................9CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11APPENDIX..................................................................................................................................................12Table 1Portfolio of shares that comes under FTSE NASDAQ DUBAI SHARIAH INDEX.........3Table 2: Sharpe ratio of Tata ethic fund..........................................................................................8Table 3: Sharpe ratio of HDFC mid cap opportunity fund..............................................................8
INTRODUCTIONIn today era, numbers of investment options are available to the investors. Each financialinstrument has some positive or negative points. Needs of investors also different from eachother. Every investor wants to earn maximum profit at minimum risk. Hence, portfolio isprepared in this report. Portfolio is prepared in balanced manner by considering number offactors. Mutual funds are other safe heavens where investors are increasingly make investment.In this report, Islamic and conventional mutual fund returns are compared with each other. Inline to this active and passive asset allocation is also discussed in the report in terms of theirsuitability to Islamic mutual fund. By giving relevant example importance of active assetallocation is explained in the report.Answer 1Table 1Portfolio of shares that comes under FTSE NASDAQ DUBAI SHARIAH INDEXSYMBOLPRICEChangePercentage change52-WEEK RANGEERES.QA18.19-0.61-2.49%12.120.24MARK.QA37.29-0.71-2.37%28.645.5MRDS.QA14.23-0.38-2.81%1016.18QNCD.QA87-0.81-0.91%76.86100SWD.FGI19571.430.08%1,955.551960.01^KLSE1670-7.51-0.45%1567.911729.13SHARES OWNEDHOLDING VALUEHOLDING GAIN & PERCENT5009160.00 QAR1,122.50 QAR14.11%2007,470.00 QAR932.00 QAR14.52%5007,125.00 QAR1540.00 QAR27.22%1008,700.00 QAR245.50 QAR2.31%-0.00 QAR------Discussion on resultsPassive asset allocation is done on the portfolio and under this investment of 32,440 is made onthe varied shares. Shares that were purchased in month of February 2016 and same are hold tillthe date. Relevant shares are not sold because passive asset allocation is done and under thisequity that is purchased cannot be sold in short term. It can be seen that in 6 months time periodportfolio give a good performance. Return of 13.45% is earned on the investment amount which
is relatively good relative to return that investor earn on the fixed deposits. This portfolio isdivided among four companies. These business concerns are Ezdan holding (ERES), MashrsafAl Rayan (MARK.QA), Al Mazaya holding company (MRDS.QA) and Qatar national cementcompany (QNCD). It can be said that an attempt is made to make equivalent and reasonableallocation of fund among these securities by keeping in mind past trends and profitability. It canbe seen from the above given portfolio that allocation of 28% is made in the Ezdan fund (ERES).SYMBOLHOLDING VALUE% ShareERES.QA916028%MARK.QA747023%MRDS.QA712522%QNCD.QA870027%Total investment324551Along with this, allocation of 23% is also made in the Mashraf Al Rayan which also give goodreturn to the shareholders. Al Maazaya holding received allocation of 22% of fund followed byOuatar national cement company that have 27% in total investment amount. It is clear from thefact that equal allocation of fund is made among different companies. This strategy ensures thatin case if share price of specific share will decline loss will be limited to specific limit. It can beseen from the chart that return of 14.52% is earned on the Mashraf Al Rayan followed by AlMazaya holding company on whom return of 27.22% is earned on shares. In case of Qatarnational cement company capital appreciation of 2.31% takes place which is very low. Hence, itcan be said that on most of company’s investor earn return in balanced manner.
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