Hedge fund portfolio manager

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Reference no: EM131340779

How would one create a portfolio given the circumstances below?

Assume that you are the hedge fund portfolio manager and are starting a new fund. You have received $1 million to invest in a portfolio of derivatives. You should invest at least 20% in each of options, futures, and derivatives. No one position may comprise more than 10% of your portfolio. For each derivative instrument included in the portfolio, assess the risk of that instrument. In other words, identify and examine what could go right and wrong with this instrument. Discuss scenarios where this instrument does very well in the investment environment and scenarios where this instrument will not perform well. Discuss also the potential returns of each instrument: what is the potential return under optimal conditions and potential losses under worst case scenarios. Finally, discuss how you plan to allocate your cash in your portfolio and whether you plan to use strategies based on leverage, shorting, or reverse repurchase agreements.

Main Elements:

  • Index of potential derivatives instruments to include in portfolio
  • Short discussion of each instrument and the potential returns
  • Short discussion of each instruments and potential losses
  • Performance of instruments

This final paper should be 8-10 pages long and have accompanying charts and tables. Follow the APA requirements (i.e. no first person, keep it objective). Make sure you cite properly.  Assume that you are the hedge fund manager (one with the power to make the changes to the portfolio).

Reference no: EM131340779

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