A client approaches you with £10M to invest in a portfolio of equities. They already have investments in other asset
classes.
a) Assume a client. Assume your client’s requirements, investment objectives and risk profile. and explain it in detail.
b) Write up investment policy statement and design the strategic asset allocation for the equity portion of your client’s
portfolio. Explain the suitability of the chosen allocation for your client. Select and explain the benchmark for your strategy.
C) To illustrate to the client how your proposed strategic allocation strategy has performed in the previous five years (e.g.
Jan 2014-Dec 2018) assess the following:
- Mean return, systematic and unsystematic risk of your portfolio over that period as well as end of period value of £10M
invested in that period. - Performance of your strategic portfolio against a broad market index. using any three measures of performance you
consider appropriate.
d) Given the outlook of your client’s economy and selected groups of equities from your strategic allocation for 2019, what
would be your proposed tactical asset allocation for the next quarter? Explain.
Note: to design strategic asset allocation and test the performance of the strategy you will have to use 5 years historical
monthly returns of equity indices relevant for your strategy.
Only Use Indices that correspond to you Strategic allocation, typically 3-4 is more than enough to describe allocation
Sample Solution
