Reference no: EM132528923
Question
Hi tutor, can you help me to solve these question
Client
Details: The TeowFamily Trustwas formed in 2010 and is currently valued at $ 30m. The portfolio was significantly affected by the current market downturn, and lost 35% of its value from its peak in early March this year. The trust has an investmentobjective of generating 2 % + Singaporean Inflation rate, and wishes to lower the volatility of the fund. Although black swan events, like the pandemiccannot be avoided, the Portfolio Manager wishes to reduce the volatility by further diversifying the portfolio.
Current Portfolio: The current portfolioallocation is invested in US Bonds (Government, Investment Grade Corporate, and High Yield / JunkCorporate) and Equitiesthrough Index Fund ETFs. The Trustees have determined that Derivatives and Commodities will not be an acceptable investment. The portfolio has no allocation to other Alternative Investments such as Indirect Real Estate, Private Equity or Venture Capital, Hedge Funds or Infra-structure. The allocations across the Bonds and Equitiesare asfollows: Asset ClassesCurrent
Bonds30%---USMarket GovernmentBonds15%,US Market Investment Grade Bonds10%, US MarketHigh Yield 5%
Equity70%---US (Large, Mid and Small capitalised) 30%, EAFE 25%, Emerging 15%
1.Critique the current asset allocation by focusing on two aspects: a)ShouldAlternative Investments be included in the asset allocation?You will discuss the two best suited alternative Investments from the following list of four (1. Real Estate InvestmentTrusts; 2. Hedge Funds; 3. Private Equity and Venture Capital; and 4. Infrastructure Funds)for the Teow Family Trust.b)Should Bonds from other markets be included in the portfolio? Discuss the geographicregionBonds that will be best suited for the inclusion in the Teow Family Trust.
2.Refine the asset allocation by adding one alternative Investment from the following list of four (1. Real Estate InvestmentTrusts; 2. Hedge Funds; 3. Private Equity and Venture Capital; and 4. Infrastructure Funds). You will explain why this Alternative Investment is best suited to help the Trust better help in unexpected events such as the current pandemic.
3.Selecttwomutual fund(s) for one Equity sub-class out of the four(US Large Cap, US Small Cap, EAFE or Emerging market)and two mutual funds for the Bond market you selected in part b of Task 1 above. The mutual funds selected for the two asset classes must be complementary in nature. Mutual funds selected for Equitiesmust exhibit less correlated industry sector bias. Mutual funds selected for the Bondsmust show less correlated issuer or maturity bias. You will then explain why both Mutual funds should be included in the portfolio and how they will improve the performance of the two asset classes. Past performance over the last 6 months and last 3 years must be used in the selection process but not all performance measures should be used. You will only use the most relevant performance measure in your selection and discussion.
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