AFIN818: Case Study Report on Reducing Portfolio Investment Risk

This report presents a case study on portfolio risk reduction strategies for a client seeking to minimize investment risk. The analysis focuses on the selection of mutual funds and the implementation of asset diversification. The report details the assessment of various mutual funds based on their historical quarterly returns, variance, and standard deviation over a five-year period. The student identifies funds with appropriate returns and lower risk profiles, allocating weights to different securities and risk-free assets to achieve a desired Sharpe ratio. The methodology involves diversification across different sectors and maturities, in accordance with the principles of asset allocation. The report includes detailed tables and calculations, demonstrating the application of these strategies to achieve the target results, and references relevant literature on portfolio management and risk assessment. The report highlights the importance of balancing risk and return, and the effective use of risk-free assets in reducing overall portfolio risk.