Bloomberg Trading Game Report - FN7003 Finance, Portfolio Analysis

This report details a student's experience and analysis of the Bloomberg Trading Game, focusing on portfolio management and investment strategies within the context of the FTSE 100. The report begins with an executive summary, followed by an investment policy statement outlining the investment objective and strategy, emphasizing diversification and risk management. Chapter Two provides a portfolio summary, detailing the factors influencing FTSE 100 volatility and the construction of the portfolio, including stock selection criteria. Chapter Three offers a detailed performance analysis of selected stocks such as OCADO, RUKO, and Barclays, using models like SWOT, PESTEL, and Porter's Five Forces to assess their performance. The report includes financial analysis, balance sheets, and performance metrics, concluding with a comprehensive overview of the portfolio's performance and strategic insights. The report highlights the importance of diversification, risk management, and strategic investment decisions in achieving financial goals.

BLOOMBERG TRADING GAME
Student number
DEGREE

Table of Contents
EXECUTIVE SUMMARY......................................................................................................2
CHAPTER ONE.......................................................................................................................3
Investment Policy Statement...................................................................................................3
Investment objective................................................................................................................3
Investment strategy..................................................................................................................3
CHAPTER TWO.....................................................................................................................5
Portfolio Summary...................................................................................................................5
CHAPTER THREE.................................................................................................................9
Portfolio Performance Analysis..............................................................................................9
CHAPTER FOUR..................................................................................................................28
Conclusion...............................................................................................................................28
References...............................................................................................................................29
Appendices..............................................................................................................................31
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EXECUTIVE SUMMARY
The importance of this report is to provide information about wealth growth of an investor
through investments in securities or financial instruments. In other words, investors can
enhance their wealth by doing diversified investment in various different types of stocks
available in the capital market. Diversification is a unique technique which reduces risk by
apportioning investments among various different stocks or securities. The main aim of
diversification is to maximize returns by investing in different areas of capital market. In this
report a portfolio is set up where 150 million pounds are invested by using “Bloomberg
trading platform”. The investment is done in various classes of assets which include: retail
and consumer electronic products. Another important purpose of this report is to develop
investigative and creative expertise in trading with Bloomberg. With the help of Bloomberg
trading platform the investor can create an effective portfolio which provides maximum
return in the future.
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CHAPTER ONE
INTRODUCTION
Investment Policy Statement
Investment objective
The main objective of this project report is to provide wealth maximization technique to an
investor through diversified investment. As a financial planner, it is very important to manage
the risk in portfolio while adopting risk management technique. The wealth can be
maximizing through balanced investment in the portfolio which contains broad range of
different securities or financial instrument of FTSE 100.
Investment strategy
For buying the securities or stocks from the capital market the growth strategy of investment
is used. Growth strategy of investment is about purchasing the securities or stocks with an
aim of increasing in the securities value over a period of time i.e. one month. This strategy
follows an approach of diversification to create and manage the securities in an effective
manner (Tsangas, et. al., 2019).
According to Harry Markowitz, the creation of portfolio depend upon the relationship
between the returns expected represented by mean and the variability of these returns
represented by standard deviation or variance. Markowitz theory emphasizes on “efficient
frontier”, which provides better return for a given level of risk or minimum risk for a given
level of returns as compared to other portfolios (Eskerod, et. al., 2015).
Both risk and returns can be divided into the following two parts:
 Systematic (cannot be diversified)
 Non- systematic (can be diversified)
Systematic is such a component of risk and returns which is on account of the market wide
factors. It includes a change in economic policy, central bank restrictive policy of credit,
recession in industry, etc. Whereas non-systematic is such a component of risk and returns,
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which is on account of the performance of the company. It includes company strike,
unexpected entry of a new competitor in the market, etc (Barillas and Shanken, 2018).
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CHAPTER TWO
Portfolio Summary
Portfolio management is an important for the investors because it minimizes the level of risk
and provide satisfactory rate of return. An investor should choose securities or assets that
offer a rate of return and risk level which is acceptable to him.
FTSE 100 index is affected by geopolitical factors, industry sectors, issues affecting specific
firms and monetary policy. So what are the factors which recently influencing the volatility
and level of the FTSE:
 Interest rates
 The Brexit referendum
 Earning reports
 The bank of England’s quarterly inflation report
 Changes to specific industry sectors
The FTSE 100 impact the portfolio of investors in positive or negative manner depends upon
stocks which are included in the portfolio. The stock market impacts the rate of return and
also minimizes or maximizes the level of risk associated with portfolio. The diversified
investment helps to investors to reduce the level of risk in the portfolio (Grinold, 2018).
Returns and risk of a portfolio totally depend upon the co-relation between the securities
contained in the portfolio. The construction of portfolio basically depends upon two notions:
 Notion of diversification
 Notion of negative co-relation
What sort of shares should investors buy?
Investors find that some companies are very sensitive to the economic cycle of bust and
boom which often called cyclical stocks while other tend to be much less volatile which often
called defensive stock. Defensive stocks include big multinational consumer brand
companies and utilities, while cyclical stocks are companies like banks and builders of house
who often see their profits fall down sharply or even make losses when the economy
struggles (Kaiser, et. al., 2015).
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Should investor buy non-UK stocks?
Now a days a lot of companies especially the biggest ones on the market of UK, sell their
products and services all around the world these days. In fact about 70% of profits from
FTSE 100 companies now come from outside UK. So it is better to invest little part in non-
UK companies to earn more profits (Liao, et. al., 2018).
Following are the 8 steps which help to the investor to build a high- yield low- risk
portfolio of stocks or securities:
 Only invest in companies with a track record of consist growth
 Only invest in companies with small pension and debt obligations
 Only invest in companies with a track record of inflation- beating growth
 Only invest in companies with consistently high profitability
 Invest in companies who have sustainable competitive advantages in the market
 Always focus on the long- term and ignore the short term
 Regularly improve the portfolio by continuously selling the weakest link
 Create a low risk portfolio by broadly diversifying
The major buying by an investor which included following stocks:
 ROKU
 OCADO
Portfolio information
The five largest holdings or portfolios above 5%, at the end of the trading period are shown
below.
Holding % of Fund value as at 22.04.19
RUKO 14.96
OCADO 5.25
Barclays 24.19
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Portfolio performance record (example)
Investme
nt
Numbe
r of
shares
Beginnin
g price £
Beginnin
g market
value £
Endin
g
price
£
Ending
market
value £
Holdin
g
period
yield
% (Ri)
Mark
et
weigh
t (Wi)
Weighte
d rate of
return
(WiRi)
A 800,
000
20 16,000,00
0
15 12,000,00
0
25 0.05 1.25
B 500,
000
50 25,000,00
0
25 12,500,00
0
10 0.20 2.00
C 600,
000
40 24,000,00
0
45 27,000,00
0
5 0.75 3.75
Total 65,000,00
0
51,500,00
0
7.00
Overall, the return on the portfolio is 7.00%. Performance is cumulative over the period from
2/01/2018 to 22/04/2018.
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Note: Formula for calculating the expected rates of return: E(Rport) = ∑
i=1
n
W i Ri
Where:
Wi = the weight of an individual asset in the portfolio (use the beginning market value)
Ri = the rate of return for asset i
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CHAPTER THREE
Portfolio Performance Analysis
In this part each stocks or securities that were traded are explained and analysed. We have
five stocks where we traded but analysed and described only three most profitable in detailed
based on models like the SWOT analysis, PESTEL and Porter’s Five Forces.
OCADO Group PLC
Ticker Symbol: OCDO
Sector: Consumer Staples
Company description
Ocado Group plc. was established in 2000 by Tim Steiner, Jonathan Faiman and Jason
Gissing and is headquartered in Hatfield, the United Kingdom (Bodie, Kane and Marcus,
2013). In United Kingdom the company operates its business in online grocery and also
internationally. Ocado functions its business operations through two sections: Retail and
solution. The company involved in the monetization and development of intellectual property
and technology used for the online logistics, consumer goods, retailing and distribution of
grocery. On its website: Ocado.com, the company also sells general merchandise products
which includes three speciality destination sites like sizzle, a kitchen and dining store; fabled,
a premium beauty store; and fetch, a pet store.
Opening Message
The company main strategic objective is to align the interests of our investors, customers and
other important stakeholders to offer long term shareholder value. Ocado relies on online
shopping done by the customers (Liao and Chou, 2013). Following are the key points of
company which are mentioned below:
Delivery Punctuality: 94.9%
Mature CFC efficiency: 164 units per hour
194 deliveries per van per week
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Average basket size: £106.85
Order Accuracy: 98.8%
Average orders per week: 296K
Performance
1 week 5.39% (rise) 1 year 159.51% (rise)
1 month 31.82% (rise) 2 year 471.58% (rise)
3 months 69.94% (rise) 3 year 374.84% (rise)
6 months 63.25% (rise) 5 year 200.11% (rise)
Past performance is an indication of future performance and Performance figures are based
on the previous close price.
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Financial Analysis
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