How might you have had to convince investors

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Reference no: EM133746956

Project details

1. Portfolio selection and back-testing

Using the portfolio visualizer platform. Choose from a universe of US stocks, bonds, bills, money market instruments, funds, precious metals cryptocurrencies and commodities to create 3 portfolios. One portfolio must be entirely comprised of US equities specify the companies that you have selected to invest. Diversify your portfolio and include at least 15 different companies in different industries. The other two portfolios can be comprised as a mixture of any of the aforementioned asset classes.

You must write at least three pages explaining the choices you make for the portfolios. This may include a discussion of the appeal of the asset classes, perceived risk and rewards, outlook for the coming year. You could also discuss particular strategies that you may be following. Essentially this part of the exercise requires that you provide adequate justification for your choices. You can assign the weights to each of the securities in your fund as you see fit.

Your next task is to back test the portfolios over a period of fifteen years (or nearest maximum available years). For each portfolio you must write at least a page appraising each portfolio's performance. It is important that you appraise the performance against a benchmark based on the Vanguard 500 index. Comment upon the metrics produced by each portfolio, that detail the return, value at risk, reward to volatility and any other aspects that you feel are relevant to explaining performance. You must also analyze your portfolios performance against the other portfolios and those of the benchmark.

2. Poorly performing investing periods during the back test

Write another page that investigates poorly performing years and drawdown periods, explain reasons why this may have happened. How might you have had to convince investors to stay invested in your funds during such periods. You can also include a discussion here about how the assets or asset classes performed individually. Do you have any regrets in your choices?

3. Portfolio optimization

For this part of the project take the portfolio that comprises only of US stocks. Run this portfolio through the optimization software on the portfolio visualizer platform to find out the appropriate weights to give to each to stock.

Write two pages on how this optimization process has helped you to improve your original choice. What difference has the optimization process made? Discuss the relevant metrics. Importantly, discuss how this new optimized portfolio has performed against the benchmark.

Conclude with a discussion of whether the active approach that you have taken is worth pursuing as opposed to passively investing in an index linked fund. Refer to evidence from your experience in the project to support the points you make in this discussion.

Required in total : Nine pages of discussion and analysis along with full appendix of portfolio performance characteristics and performance metrics generated by the portfolio visualizer software.

Reference no: EM133746956

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