Investment Policy Statement Essay

4725 words - 19 pages

Executive SummaryThe report has been prepared for Brown Investments to provide an Investment Policy Statement for capital appreciation at an accepted level of risk maintaining the confidence of investors. A diverse range of asset classes are used in the policy statement in making a portfolio for Browns Investment.The report consists of three parts; (i) construction of the Investment Policy Statement including investment objectives, target return of proposed portfolio, risk, constraints, investment guidelines, strategy and its suitability; (ii) methodology used, computation and construction of portfolio; and (iii) performance evaluation.Sources of information used in this report are authentic and mainly from reliable sources. The security data and other relevant figures of data are from authentic sources such as ASX, RBA and ANZ bank.The Treynor and Sharpe ratios are positive. The excel solver has been used to calculate the weights of the securities and other relevant information.The return (approximately) from the portfolio is less than the target return of 15% and below the market return. However it is not possible to evaluate the performance of the portfolio on the basis of 8 weeks as the evaluation should extend over several years and cover at least a full market cycle as the time frame considered for the portfolio which is medium to long term. In addition the portfolio manager is being constrained by the availability of merely 15 securities, limited funding and not being able to short sell. Further the benchmark ASX 200 is considered a realistic proxy for the portfolio which unfortunately does not represent the true composition of the market portfolio as it includes only common stocks listed in the Australian stock exchange and excludes other risky assets that theoretically should be considered.1INTRODUCTION1.1BackgroundBrown investments are a professional fund management concern. For the purpose of this report a sum of $100 million is invested in government securities, property, domestic shares etc.1.2PurposeThis report aims at critically analyzing the performance of the portfolio by evaluating the value of the securities that have been invested into. Various analytical tools have been developed to assist in evaluation.1.3ScopeThis report provides an overview of an investment policy statement, the methodology used (excel solver) and also provides a critical evaluation of the portfolio. The scope also includes the process of setting a portfolio strategy, and expected yield in line with the risk return preferences.1.4LimitationsThis report is based on historical data. Investments are made on the basis of preset risk profiles; the movement of stock prices is made available prior to making investments. Excel solver offers the weights of the investments made.2INVESTMENT POLICY STATEMENT2.1Investment ObjectivesThe options for investing are continually increasing, yet an investment can be categorized according to three fundamental characteristics -...

Find Another Essay On Investment Policy Statement

Financial Statements Essay

514 words - 2 pages provide information for future net income. Managers of the company use the income statement to forecast their revenues and expenses. Retained Earnings statement is retained profits that the company would like to have for further expansions or investment opportunities. Companies use the Retained Earnings Statement to see the company’s policy toward dividends and growth. Also to see how much dividends was paid out. If a company is striving for

Intermediate Accounting GAAP Discussion Essay

929 words - 4 pages limited-payment long-duration insurance contracts and investment contracts and amends Statement 60 to change the reporting of realized gains and losses on investments as this is the primary method of paying benefits and dividends to contract holders (where applicable). Since some life insurance contracts have different provisions than do the life insurance contracts to which Statement 60 applies usually characterized by flexibility and discretion

China: Pros and Cons of the Regional Comprehensive Economic Partnership

1408 words - 6 pages with the major members of the RCEP remains to be a strong one, the absence of a formal investment and trade policy has created extensive barriers for Australia’s investors, service suppliers and goods exporters. More specifically, these barriers have affected trade in goods by remaining substantial for such areas as Australia’s agricultural products, processed foods and manufacturing goods (including automotive and steel products). Because of

This article is about the debt limitation bill of the Governemnt Of Pakistan

1698 words - 7 pages debt to sustainable limits and restricting government borrowing for meeting non-development expenditure through effective debt and fiscal management. The government, under the law, would be required to file three statements every year to the National Assembly. They will be the medium term budgetary statement along with a three-year rolling target, fiscal policy statement and debt policy statement.The fiscal policy statement would be specific to key

National Income

2759 words - 11 pages Services; b)         Equilibrium in the Financial Markets. c)         Changes in Saving: The Effects of Fiscal Policy; d)          Changes in Investment Demand. 7. Conclusion I.         Definitions: Factors of Productions: The inputs used to produce goods and services Production Function: The mathematical relationship showing how the quantities of the factors of production determine the quantity of goods and services

Monetary Policy

1756 words - 7 pages As the chair of this newly created central bank, I present to you a guideline statement. This statement will discuss the importance of transparency in our new central bank and will focus on our objectives and principles that will be mandated. Transparency will be one of the most important aspects of this central bank along with accountability and public disclosure. This means that the monetary policy set forth by our central bank will be

To What Extent Does Contractionary Policy Contribute to a Decline in Economic Activity?

1600 words - 6 pages run, the level of output will depend on the capital stock in the economy. A lower budget deficit leads to more investment and hence a higher capital stock leading to higher output. According to Blanchard (2011), “When capital and output are low, investment exceeds depreciation and capital increases” This statement best describes what happens in the long run as per Saint-Paul (1993) in the aftermath of World War Two on growth and capital

Monetary Policies in the US and Japan

2222 words - 9 pages to 6.1% in 1990 (Figure 2). The general increase in price level combined with decrease in real GDP made recessionary gap even bigger. The response of the Fed was to stimulate a weak economy by conducting expansionary monetary policy. What they decided to do is to buy bonds, thus, increase money supply. This, in turn, resulted in decrease in interest rate and increase in investment (Figure3). Furthermore, lower interest rate decreased the demand

Cash Flow Statement

578 words - 2 pages 1.Prepare a statement showing the incremental cash flows for this project over an 8-year period.I = $1,000,000-Working Capital: WC = $200,000Yi is: ChWCi = Previous Year WC - Current WC = 0 (i=1 to 7)andChWC0 = -$200,000The working capital is recovered so for the end of the year 8 it will be zero or: ChWC8 = $200,000-Depreciation: For the first five years Yi (i = 1 to 5):Di = (Invest in plant and equipment) / 5 = $1,000,000/5 = $200,000For the

Lehman Brother Holding Inc. Ethical Research

1204 words - 5 pages fourth-largest investment bank in the Unite Sates. It provided investment service for the clients and it founded in 1850.It mainly operated on trading sales, private banking, investment bank and investment management. The biggest turning point for the company is 2008 because it had credit crisis with 639 billion assets and 619 billion in debt. after that , Lehman Brothers Holding Inc. announced bankcrupt. There are several reasons caused Lehman

Challenges in Formulation of EU’s Industrial Policy

5435 words - 22 pages industrial policy. For the formulation of Industrial policy, Globalize competitiveness is a great challenge. It solidifies the competition among the industries for the investment in business activities and also compounds the revenues from the tax services and labors between the countries and their member states. The business organizations of the Europe broadly conduct their business activities on the large scale, other than the member states of the

Similar Essays

The Overnight Policy Rate (Opr) Essay

935 words - 4 pages Policy Rate (OPR) Date Change in OPR (%) New OPR level (%) Monetary Policy Statement 12 Nov 2010 0 2.75 View statement 2 Sep 2010 0 2.75 View statement 8 Jul 2010 +0.25 2.75 View statement 13 May 2010 +0.25 2.50 View statement 4 Mar 2010 +0.25 2.25 View statement 26 Jan 2010 0 2.00 View statement 24 Nov 2009 0 2.00 View statement 28 Oct 2009 0 2.00 View statement 25 Aug 2009 0 2.00 View statement 29 Jul 2009 0 2.00 View statement 26

Foreign Investment In Australia Essay

2902 words - 12 pages InvestmentForeign Acquisitions And Takeovers Act 1975 (Cth)Foreign Acquisitions And Takeovers Regulations 1989 (Cth)Foreign Acquisitions And Takeovers Amendment Regulations (No. 1) 1999 (Cth) - Explanatory StatementAdministration, Policy EtcForeign Investment Review Board (FIRB)FIRB - About UsWhilst the Australian Government actively encourages foreign direct investment (FDI), because it contributes positively to economic growth, transfers of technology and

Managerial Risk And Incentive Essay

840 words - 4 pages 1. Problem statement The authors’ main focus is the sensitivity of CEO wealth to stock return volatility (vega). They find that the higher vega leads to riskier policies made by managers. Examples of risky policies are investment in research and development and high leverage. It indicates that vega is an incentive for executives to invest in riskier asset and more aggressive debt policy. Therefore, firms with high growth opportunities may want

Financial Management Essay

918 words - 4 pages years. The new line will also require an additional net investment in inventory and receivables in the amount of $200,000. Assume there is no need for additional investment in building and land for the project. The firm's marginal tax rate is 35%, and its cost of capital is 10%. Based on this information you are to complete the following tasks.1. Prepare a statement showing the incremental cash flows for this project over an 8-year period.2