The client’s asset portfolio consists of bonds, equity funds, ETF and stocks invested from London Stock Exchange.
First of all, according to Mary’s premier risk preference, 30% of the assets have been invested in bonds. The bond investment percentile of 30% is usually regarded as a preferable long run investment for a risk aversion investor for the reasons of that the annual yield of bonds has already been fixed and the default risk of bonds is relatively low. Among all kinds of bonds, the risk of the treasury bond is the lowest. Therefore, we chose two UK gilt bonds with different maturities in our portfolio. The coupon values of these two bonds are 8.75% and 8% respectively. Meanwhile, we invested in two corporation bonds, which are raised by Lloyds Bank Group and its subsidiary. Since the credit ratings of these bonds which are given by Standard & Poor and Moody’s are above A. In other words, the default risks of these bonds are low. In addition, the flat yield of these bonds are much higher than that of the UK gilt bond, which reaches 7.46% and 8.428% respectively.
Secondly, 20% of Mary’s assets had been invested in funds. In this part, we invested most of the assets in insurance fund and pension fund; only a small proportion, about￡1,000, had been invested in ETF. Specifically, we put 10% of the assets in 2 well-performing insurance funds, Skandia Fleming Mid Cap Investment TST and MetLife Schroder UK MID 250 GBP ACC NAV, which got five stars according to the Morningstar Rating system. Meanwhile, the other 10% of the assets has been invested in pension funds. Based on the historical data analysis, we selected Skandia Fleming Mid Cap Pens and Aviva Invesco Perptual UK Aggressive S6. The annual return of these two funds was reached 35.99% and 31.9% respectively in 2012. The second one even owns the top rank among the same category of fund this year. Lastly, there is a small proportion in our portfolio has been invested in Ishares II PLC Ishares Listed Private Equity Ucits ETF. It can be seen from the statistics data that the performance of this ETF is better than the general sector performance since 2009, and the 5 Years annualized returns reached 10.88%.
Thirdly, the stock portion takes up about 30% of the whole portfolio. Particularly, 14 outstanding performed shares are selected from the leading industries and all of them come from the London Stock Exchange. According to their historical performance during the last 2 years we have classified these 14 equities into 3 categories. In detail, there are 9 long-time holding stocks, 6 short-time holding stocks and 1 special function stock. Generally, we put more money in long-time holdings than short-time holdings, because long-time holdings perform more stable and earn higher income than other shares.
Meanwhile, we invested a global stock, Unilever, as a bond substituent. The company business model of the Unilever can prevent inflation at some degree, and its financial...