Finance 2 Case Study: Evaluating an Investment Portfolio's Performance

This finance case study analyzes an investment portfolio's performance from February 23rd, 2018, to May 15th, 2018, considering global economic, industry, and market environments relevant to the Australian equity market. The study examines the portfolio's composition, including equity shares, short sales, LICs, ETPs, and future contracts, and its performance during the specified period. The analysis compares the portfolio's returns to the ASX 200 index, identifying significant contributors to the portfolio's success, such as technical and trend analysis. The case study concludes with a recommendation to maintain the current portfolio structure, as it has demonstrated superior performance compared to the market index. The portfolio's value increased from $1,500,000 to $1,684,710.84, outperforming the ASX 200 index during the analyzed period. The study references relevant academic literature to support its findings and recommendations.

Running head: CASE STUDIES FINANCE 2
Case Studies Finance 2
Name of the Student:
Name of the University:
Authors Note:

CASE STUDIES FINANCE 2
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Table of Contents
Summary of the Global, economic, industry environments relevant to equity market during
the investment period:................................................................................................................2
Summary of the Investment portfolio from Feb 23th 2018 to May 15th 2018:.........................2
Identifying the investment components which were the significant contributor to the
portfolio:.....................................................................................................................................4
Analysing performance of the portfolio using performance of the index during the period:....5
Recommended investment component of the portfolio:............................................................5
References:.................................................................................................................................6

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Summary of the Global, economic, industry environments relevant to equity market
during the investment period:
The evaluation of global economic industry environments directly indicates a positive
attribute for companies conducting their operations. Moreover, the positive attributes of the
financial sector are relatively improving the return generation capability of different sectors
in the world. In the current era, the global financial position is a relatively adequate, which is
boosting the economic condition of different countries and industries. Australian companies
are relatively generating higher profitability due to increased export and profits. Therefore, it
could be understood that conducting investments in the current period is a viable approach for
investors, as higher returns can be generated from the creative portfolio (Rey, 2015).
The current Global Position of Australian equity market is a relatively high, where
adequate investments are being conducted by investors all around the world. this has a
relatively helped in boosting the overall share market of the country. Furthermore, the
decision made by the government of Australia regarding the corporate tax cut is relatively
discussed in the parliament. This has many increased the investment opportunities in the
Australian equity market, which could allow investors to generate high rate of return from
investment. Thus, from the evaluation it could be identified that the current portfolio made
from the stocks of Australian companies but eventually help in generating higher rate of
returns as the overall market is in an uptrend.
Summary of the Investment portfolio from Feb 23th 2018 to May 15th 2018:
Particulars
23th
Feb
2018 Number Cost Amount
Equity Shares – Purchases
Aristocrat Leisure 24.46 10,004 $ 244,697.84

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BlueScope Steel Limited 15.49 10,000 $ 154,900.00
Altium Limited 20.07 10,000 $ 200,700.00
Bapcor Ltd 5.86 10,000 $ 58,600.00
Goodman Group 8.21 10,000 $ 82,100.00
Cochlear Limited 181.5 1,800 $ 326,700.00
Qantas Airways Limited 5.73 10,000 $ 57,300.00 $ 1,124,997.84
Equity Shares – Short
Sales
Commonwealth Bank of
Australia 75.46 1,660 $ 125,263.60
$
(125,263.60)
LICs and ETPs
WAM Capital Limited 2.068 10,000 $ 20,680.00
VANGUARD US TOTAL
MARKET SHARES
INDEX ETF 178.21 850 $ 151,478.50 $ 172,158.50
Hedged Position for ASX
Equity Investments
Future contract ASX 200 5 20,000 $ 100,000.00 $ 100,000.00
Cash Investment in Cash
Management Trust
Cash Holding (minimum
requirement $227,520) $ 228,107.26
Total $ 1,500,000.00
Particulars
15th May
2018 Number Cost Amount
Equity Shares – Purchases
Aristocrat Leisure $ 28.67 10,004 $ 286,814.68
BlueScope Steel Limited $ 17.78 10,000 $ 177,800.00
Altium Limited $ 22.66 10,000 $ 226,600.00
Bapcor Ltd $ 6.33 10,000 $ 63,300.00
Goodman Group $ 9.00 10,000 $ 90,000.00
Cochlear Limited $ 192.73 1,800 $ 346,914.00
Qantas Airways Limited $ 6.29 10,000 $ 62,900.00 $ 1,254,328.68
Equity Shares – Short Sales
Commonwealth Bank of
Australia $ 70.92 1,660 $ 117,727.20 $ 7,536.40

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LICs and ETPs
WAM Capital Limited $ 2.37 10,000 $ 23,700.00
VANGUARD US TOTAL
MARKET SHARES INDEX
ETF
$
186.81 850 $ 158,788.50
$
182,488.50
Hedged Position for ASX
Equity Investments
Future contract ASX 200 $ 5.00 20,000 $ 100,000.00 $ 12,250.00
Cash Investment in Cash
Management Trust
Cash Holding (minimum
requirement $227,520) $ 228,107.26
Total $ 1,684,710.84
From the valuation of the above two tables it could be identified that the investment
value has a relatively increased from $1,500,000 in 23rd February 2018 to $1,684,710.84 in
15th may 2018. The relatively indicates that the portfolio value has increased due to the
profits generated from equity shares, short selling, LIC, ETP and future contract held by the
portfolio. This relatively indicates that the portfolio is an adequate profits generation
capability, which would eventually help in improving the returns from investment. In this
context, Geels et al., (2016) stated that creation of adequate portfolio allows the investors to
minimise risk from investment and maximize the returns that could be generated regardless
the negative impact from capital market.
Hence, from the evaluation of the above table it is also identified that the investment
scope used in the portfolio is providing adequate returns from investment. The portfolio
created investment purposes has adequately provided returns in all the market conditions
during the three-month period. Therefore, it could be understood that the portfolio could
generate higher rate of returns during the short and medium duration for the investors.
Moreover, the investment scope used in drafting the portfolio is also viable, as it helped in

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detecting the adequate investment opportunities which could improve returns from
investment.
Identifying the investment components which were the significant contributor to the
portfolio:
The main components that was a significant contributor to the portfolio is technical
analysis and trend analysis used in selecting the stocks. Both the components directly help in
detecting the investment opportunity in relevant stocks, which would generate higher rate of
returns when combined in a particular portfolio. The use of adequate, which also help in
minimising the risk involved in investments and maximize the profits that could be generated
from the trade. Hence, body investment scope can be used for future analysis of the portfolio
to generate higher rate of returns from investment, while minimising the total risk (Patel et
al., 2015). In addition, the selection procedure of evaluating the historical price to determine
the highest return generated by stocks is an adequate measure to detect the investment scope,
which could be gathered in a particular portfolio.
The investment component used for drafting the overall portfolio is considered to be a
viable approach, as the portfolio has generated higher rate of returns from investment. This
relatively indicates that technical analysis can be used for effectively identifying investment
opportunities, which could generate higher rate of return for short and medium duration.
therefore, it could be understood that the use of Technical Analysis and simple moving
average would eventually help in identifying the investment scopes for investors to generate
higher rate of returns in short duration. In this context, Rey (2015) mentioned that with the
help of calculations and progressive technical analysis indicators investors are able to
understand the overall trend of a particular investment, which helps them make adequate
investment decisions.

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Analysing performance of the portfolio using performance of the index during the
period:
Particulars 23rd Feb 2018 15th May 2018
Portfolio Value $ 1,500,000.00 $ 1,684,710.84
Portfolio Return 0.00% 12.31%
Asx 200 Index Value 5999.8 6097.8
Asx 200 Index Return 0.00% 1.63%
The above table helps in understanding the level of protons that is provided by the
portfolio and the index of Australia, which is used in the portfolio. the calculation relatively
indicates in that the portfolio has generated higher rate of returns in comparison to the index.
The portfolio has generated around 12.31% during the period of 3 months from 23rd
February to 15th May, 2018 (Au.finance.yahoo.com, 2018). On the contrary the index value
has only generated 1.6 3% returns during the specified period, which could directly have an
impact on profitability generation capability of investors. Hence, the evaluation also indicate
that the current portfolio is an adequate performer, which generates higher rate of returns for
the investors in comparison to ASX index. Rey (2015) stated that with the adequate portfolio
investors are able to mitigate the risk from generated capital market and maximize their
profitability by using adequate weights during the investment process.
Recommended investment component of the portfolio:
Therefore, it is recommended that no further alteration in the portfolio needs to be
conducted, as the selected portfolio generate higher rate of return, while minimizing the risk
involved in investments. No alteration to the portfolio needs to be conducted as the portfolio
has been providing higher returns from investment, which is calculated in the above tables.

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In addition, the portfolio is also outperforming the Australian index, which indicates the high
capability of the stocks to increase returns from investment. From the overall evaluation of all
the calculations it could be identified that the portfolio is estimated to provide adequate
returns in future for the investors. In addition, the measures used in calculating the overall
investment opportunity is considered to be a viable approach, which might allow investors to
detect adequate investment opportunities that could generate higher rate of returns from
investment. However, the current portfolio is relatively considered to have a viable approach
and could generate higher returns from investment for the investors.

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References:
Au.finance.yahoo.com. (2018). Au.finance.yahoo.com. Retrieved 8 June 2018, from
https://au.finance.yahoo.com/
Geels, F. W., Kern, F., Fuchs, G., Hinderer, N., Kungl, G., Mylan, J., ... & Wassermann, S.
(2016). The enactment of socio-technical transition pathways: a reformulated
typology and a comparative multi-level analysis of the German and UK low-carbon
electricity transitions (1990–2014). Research Policy, 45(4), 896-913.
Patel, J., Shah, S., Thakkar, P., & Kotecha, K. (2015). Predicting stock and stock price index
movement using trend deterministic data preparation and machine learning
techniques. Expert Systems with Applications, 42(1), 259-268.
Rey, H. (2015). Dilemma not trilemma: the global financial cycle and monetary policy
independence (No. w21162). National Bureau of Economic Research.