submission guidelines and indicative mark scheme
Length: 3000 words (+/- 10%) Note: executive summary, contents page, reference list and appendices are excluded from word count. A penalty of 10% will be applied to all submissions over the maximum word count. Attempts to deliberately circumvent wordcount will be penalised.
Style: Report using Harvard system of referencing.
Submission requirements: Portfolio maintained on Bloomberg, soft copy of investment report on Turnitin.
Your assignment requires you to follow the portfolio management process for the individual whose details are contained within the investment policy statement attached as Appendix A to this brief. Assume the individual has been interviewed to determine their needs and a policy statement provided.
You should complete the following activities, using Bloomberg as a starting point, and any other resources as you deem necessary.
• Analyse the external environment
• Create an appropriate portfolio of equities, taking the investor’s profile into account. As you are only required to invest in equities, you should base the value of the equities invested on a specified asset allocation strategy. e.g. if you invest only half of the available investment funds, you should explain what you would have done with the remaining funds, if further investment options were available to you.
o Ensure you explain the investment strategy used and provide reasoning for the investments made. Although an initial strategy would be good, your final investment strategy is expected to develop over time as you learn new skills during the module.
o As you are to manage your portfolio for 13 full weeks, it is recommended that you create your portfolio by the end of week 9 at the very latest. This would allow you to close your portfolio during week 22, and give you two weeks to write up your report. The latest you can possibly open your portfolio is week 11. This isn’t recommended.
• Track your portfolio and the market closely for a period of thirteen weeks exactly, making changes to the portfolio as you deem appropriate. As a minimum, you should ensure you have a record (screenshot if required) of the portfolio at the start and end date. There is no requirement to make changes during the Christmas Break.
• Review the final performance of the portfolio, including:
o A critical evaluation of relevant measures of portfolio performance in the context of your portfolio
An explanation of whether your portfolio achieved the objectives of your investor.
• Critically evaluate whether any information provided in the module after the investment start date would have changed the way you carried out this assignment.
• Write up the entire process in a report format.
Write a report explaining the entire process followed, describing the strategy adopted, and explaining what results were achieved, and whether these were as expected. You should link your reasoning to relevant academic theories. You should include key data or additional screenshots as you feel necessary.
The written report should be 3000 words in length (+/- 10%).
Assessment and Marking Scheme
Note that the grade you achieve will NOT be affected at all by the performance of your portfolio e.g. if you make a loss, this will not affect your grade. However, your responses to the performance will affect your grade.
In terms of referencing, you are required to use the Harvard system of citation. Also, beware of the academic regulations regarding plagiarism.
A detailed marking scheme is given on the next page:
i. Management of individual portfolio for a period of 13 weeks
This will be allocated based on three aspects:
a. The duration of the portfolio (5 marks deduction for every week less than 13 over which the portfolio is managed, up to a maximum of 35 marks)
(0 to -35 marks)
b. The number of assets held at the end of the portfolio period. (You will not be told how many, but should take guidance from the lecture content.)
c. Your engagement with Bloomberg. (Again, there is no absolute measure, but your lecturer can see when transactions are being made. This is to ensure engagement throughout, enhancing your chances of success, rather than an attempt to ‘cram’ the assignment over a short space of time.) (20 marks)
ii. Written report
This will be marked taking into account the grade descriptors provided at appendix C of your handbook, in conjunction with the detailed marking criteria below:
• Selection of an appropriate investment style.(5 marks)
• Development and management of an equity and fixed income portfolio using real data. (10 marks)
• Evaluation of your portfolio performance, making use of statistical methodologies used in portfolio management. (20 marks)
• Reference to appropriate finance theory (5 marks)
• Effective communication and presentation (5 marks)
• Appropriate use of Harvard referencing (10 marks)
Appendix A – Investment Policy Statement
Investor name: Mr R Bomstad
Investor age: 52
Investor risk profile: High risk, active management preferred.
Source: https://www.standardlife.co.uk/c1/guides-and-calculators/assess-your-attitude-to-risk.page last accessed 1 September 2017
Stage in investor lifecycle: Consolidation Phase heading towards spending/gifting phase
Investment Objectives / Risk and Return
Excess cash available for investment: £500,000 annual bonus fully available for investment
Expected return over 1 year: 25% (if investment were to continue, see ‘time horizon’ below.)
Expected return over 3 months: 8% above market return
Acceptable loss over 3 months: 10%
Existing investments: a very good pension fund, a house worth £4.5m (no mortgage), undeclared cash amount in bank
Investor Constraints & Philosophies
Time Horizon & Liquidity: There will be no requirement for cash returns during the investment period. All dividends should be re-invested and all proceeds of equity sales should be used to invest in alternative funds. The initial time horizon is 3 months. The initial portfolio should be actively managed to try and achieve the 3 month expected return. Should this be successful, the investor may choose to continue to invest on a year by year basis, depending on results.
Tax philosophy: No avoidance. Ignore tax effects of portfolio, client will manage tax aspects those himself.
Other philosophies: No strong personal beliefs with regards to any investment.