PORTFOLIO MANAGEMENT

Portfolio Management

Table of Contents

ASSET ALLOCATION STRATEGY UTILIZING BONDS2

STRUCTURING THE PORTFOLIO3

BOND CALCULATIONS3

THE SOUL OF THE PORTFOLIO8

KEY RECOMMENDATIONS8

CALCULATION OF WEIGHTINGS10

REFERENCES20

APPENDIX22

Portfolio Management

Purpose of this assignment is to invest £10,000,000 by forming the portfolio. Firstly? I have discussed general investment trends & environments & than shown how I made portfolio & invested £10,000,000 in order to generate maximum profits. Asset allocation is based on incontrovertible truth that the portfolio needs to be structured on basis that no one can predict future. THE colleague of mine predicted that S&P 500 would be up about 17% in 2009. He is now rationalizing his inaccuracy by blaming sub-prime mess.

Asset Allocation Strategy Utilizing Bonds

To begin with? investors should decide on the strategy for allocating their assets. My choice is to use bonds. This way we can identify best manager for any particular category. Do not use index funds. Index funds are glorified traps in down markets. They are not actively managed? so no one is there to save investor in down markets. There is an active manager that is superior to any index fund.

Relying on market incentives such as the Tobin tax represents the simple policy tool for lengthening time horizon of international PI. It would provide new pools of finance that could be targeted to developing countries to compensate those harmed by financial instability & to finance long-term? real-sector development projects

Of all criteria? risk is by far hardest thing to figure out. While market is going up I've heard people say they could lose 20% before they would worry. Amount of risk anyone can take tends to vary with market conditions? age & life experiences. It is usually safest to start with the portfolio that is more conservative than aggressive.

Structuring Portfolio

There are five basic asset classes that I recommend; stocks? bonds? cash? real estate & commodities. Don't try to time markets? because it doesn't work over an extended period of time.

Here are examples of "heart" of the portfolio. Think of previous funds as soul of the portfolio? but these are examples of core hybrid funds.

Capital Income Builder

Black Rock Global Allocation

Ivy Asset Strategy

Oakmark Equity & Income

Pearl Total Return

Vanguard Wellington

Thornburg Investment Income Builder

Bond Calculations

Following TVM register values are also used in calculation:

n - Number of payments per year*.

i - Yield to Maturity.

PMT - Coupon percentage rate.

 [PRICE] key does not modify any memory register values. This function also calculates interest accrued since last interest date when key is pressed, & result is stored in K memory register. If you are using an algebraic mode, you can recall K register to retrieve accrued interest result. If you are working in RPN mode, this result is also placed in Y stack register.

Below, we demonstrate use of this function in both RPN & algebraic input modes.

What price should you pay on April 25th 2005 for the 6.75% U.S. Treasury bond that matures on June 1st 2015, if you want the yield of 8.25%. Assume that you normally express dates in month-day-year ...