You are a Research Analyst working for a top portfolio management firm, "UMUC Portfolio Management" (in no way affiliated with the University of Maryland University College).
A high-net-worth client has approached your firm with the objective of finding an analyst qualified to manage their large portfolio. Your firm has selected several of its analysts to develop test portfolios in order identify the best person to manage the portfolio of this rich client.
You have been selected by your firm to develop a 5-week trial portfolio to present to the client (and class). Because of the importance of this client (and their potentially large investment) your fee for demonstrating superior portfolio selection and management skill will be subst antial.
The analyst with the best report will become the portfolio manager for this high-net-worth client's portfolio (valued at over $100 million). Your portfolio management report and presentation will be submitted directly to your firm's high-net-worth client with the approval of your firm's Board of Directors.
The success of your recommendations will determine the success of your firm in landing this large investor. (It is expected that your portfolio recommendations will not be the same as those reached by other analysts).
You should do a market wide financial evaluation to determine the current situation, best investment course, appropriate asset allocation for this important client.
STEP ONE: Update securities prices daily.
Prepare an Excel Spreadsheet Investment analysis of Investment Returns. Submit the Investment Returns Analysis to the P5-Written Report Draft Assignment Folder.
STEP TWO: You have been given another $100,000 for the demonstration Portfolio. You are to purchase five (5) Futures contracts at the beginning of the week. (Note: It is recommended that you use CME.com for Futures Information).
Please keep in mind that you do not have the luxury of trading or selling and/or buying securities during your portfolio holding period.
After you determine your initial portfolio you must buy the portfolio using the HYPERLINK "https://www.cboe.com/tradtool/virtualtrade.aspx" CBOE Virtual Trade Tool ( HYPERLINK "https://www.cboe.com/tradtool/virtualtrade.aspx" https://www.cboe.com/tradtool/virtualtrade.aspx).
The commission costs per trade (using CBOE Virtual Trade) are $9.95/trade for stocks and ETFs and $14.95/trade for options. The securities you choose for your portfolio can be selected from any traded securities that are available on CBOE Virtual Trading.
STEP THREE: The assignment for the fifth week week is to make your first futures purchases using the CBOE Virtual Trade Tool ( HYPERLINK "https://www.cboe.com/tradtool/virtualtrade.aspx" https://www.cboe.com/tradtool/virtualtrade.aspx).
What did you purchase and how does it relate to the investment policies and strategies statement you developed for Homework #1? Did you modify the investment policies and strategies? If you changed your investment policies and procedures what exactly did you update? If you revised your investment strategies did you inform the client?
Your futures purchase strategy should be 1-2 pages (300-600 words), with at least three references. By the due date, submit Homework #5 to your P5- Assignment Folder.
STEP FOUR: Complete a Draft Written Portfolio Analysis Report of the Portfolio Management Project. The Portfolio Management Project report is organized as an individual case study exercise. You will select a portfolio to study.
This report is 16 to 20 pages double-spaced using APA formatting, with appropriate references. There should be an abstract or executive summary (200 to 300 words). The Written Portfolio Analysis Report will be evaluated on the basis of: Portfolio Construction and Management Establish objectives for construction and management of a portfolio, policy statement, strategy, asset allocation, industry analysis.
Implementation and application of specific and well-articulated portfolio management strategies; portfolio design, security selection criterion, initial and final Portfolio.
Show time series record including, price, value, cash, return, cumulative wealth, and profit and loss table with discussion Development and utilization of investment management tools: including online stock screeners, research tools and information, correlation, etc.
Demonstrate understanding of concepts. Portfolio Management Evaluation and Assessment Provide explanation of the linkages between investment strategies and assets selected for inclusion in the portfolio (i.e., Why were specific securities purchased?) Risk return analysis; statistics table with geometric mean, standard deviation, beta, percent systematic risk, R2, etc.
Including CML, SML and correlation matrix with clear explanation Compare investment returns to market benchmark; Explain differences between securities, portfolio, index; including terminal wealth, performance measures statistics, Sharpe, Treynor, and alpha, including formulas and discussion.
Quantitative Analysis and Critical Thinking Accurate computation of statistics, use of quantitative methods, utilizing professional analysis and critical thinking; including geometric mean, terminal wealth, standard deviation, Beta, value at risk, information ratio, etc. Presentation of Paper and Writing Organization, format and presentation of paper including title page, executive summary, table of contents, introduction, body, etc.
Writing, grammar, spelling & punctuation; methodology, explanation of all tables and figures Use of tables, figures and other graphics with labeling to summarize and support analysis, quality of charts & tables.
Logical and smooth flowing transitions and relationships among sections of the written report, with conclusions and recommendations.
Research Approach and Use of Professional Sources of Information and Data Research sources and significance of research information and data, use of APA citation and URL links
STEP FIVE: Post your MS Word formatted Portfolio Management Project Draft in Discussions, Portfolio Management Project. Use the following file name: if yourname is John Smith, the file name of your written paper should be SmithJ_PortfolioMgmtDraft05.docx.
Also post your written draft in the P5B-Portfolio Management Project Written Report Draft Assignment Folder. ADDITIONAL INFORMATION Video "Asset Allocation: A Strategy for Life" HYPERLINK "https://www.youtube.com/watch?v=RVzUGKuXbpA" https://www.youtube.com/watch?v=RVzUGKuXbpA
1. Post a DRAFT of your Report: Post your Portfolio Project Management Report DAFT in the appropriate Discussion Area and the P5- Homework Assignment Folder.
I expect your DRAFT to be incomplete so do not hesitate to submit what you have. The Portfolio Project Management Report Checklist can assist you in organizing your report.
2. Purchase $100,000 in Futures. After the simulated purchase of the Futures, your individual Portfolio should be $400,000 (not counting your gains or losses.) The write-up of your simulated Futures purchases is the same as you completed for your other securities.
Quickly summarize your P1-Investment Selection Strategy, state if you made any exceptions, indicate what you purchased, the price, the amount of Futures you simulated purchasing, and why you purchased a certain security.
3. Portfolio Ledger. Track the daily price changes of your portfolio. How does your portfolio compare to last week? What are the portfolio's gains or losses? he Portfolio Management Project Written Assignment is valued at 32% of your final course grade and covers all parts of the course.
You have been completing sections of the Portfolio Management Project Written Assignment since the beginning of the course. Each Homework Assignment represents a section of the report.
The Portfolio Management Project Written Assignment must be a minimum of 16 to 20 double-spaced MS Word formatted file plus exhibits, related documentation (e.g., tables, charts, reports, etc.), and include at least four appropriate supporting references. It should include an abstract or executive summary of around two hundred (200) words.
The written Portfolio Management Project Written Report will be evaluated based course writing rubric which includes the following criteria: Organization, format and presentation of paper including title page, executive summary, table of contents, introduction, body, conclusion, appendices, etc.
Writing, grammar, spelling & punctuation; methodology, explanation of all tables and figures Use of tables, figures and other graphics with labeling to summarize and support analyses, quality of charts & tables. Logical and smooth flowing transitions and relationships among sections of the written report, with conclusions and recommendations.
The following is a checklist for the Portfolio Management Project Written Assignment:
Part I: Presentation of Written Report Cover page with Turnitin Originality Score (A Turnitin Score is not needed for the Draft) Table of Contents Executive summary (about 200 words)
Part 1I: Portfolio Construction and Management Introduction Establish objectives for construction and management of a portfolio, policy statement, strategy, asset allocation, industry analysis. Present, discuss, and explain the investment policy for the Portfolio. Discuss the implementation and application of specific and well-articulated portfolio management strategies.
This includes portfolio design, security selection criterion, initial and final Portfolio. Show time series record including, price, value, cash, return, cumulative wealth, and profit and loss table with discussion.
What were the returns during the period you managed the portfolio? What returns do you expect the portfolio would produce over 1 year? 5 years? And why? Discuss the development and utilization of investment management tools: including online stock screeners, research tools and information, correlation, etc. Demonstrate understanding of concepts.
Part III: Body of Portfolio Management Report Explain how the investments that were selected are consistent with the investment policy statement? What changes would you recommend for the investment policy statement? What is the beta of the stock portfolio and is it consistent with the risk objectives in the investment policy statement? Would you recommend that the portfolio assume more, or less, risk? Why?
Part IV: Portfolio Management Evaluation and Assessment Provide an explanation of the linkages between investment strategies and assets selected for inclusion in the portfolio (i.e., Why were specific securities purchased?)
Provide a risk return analysis of the Portfolio. This can include statistics table with geometric mean, standard deviation, beta, percent systematic risk, R2, etc. Including CML, SML and correlation matrix with clear explanations Compare investment returns to appropriate market benchmarks Explain differences between securities, portfolio, and index; including terminal wealth, performance measures statistics, Sharpe, Treynor, and alpha, including formulas and discussion.
Part V Quantitative Analysis and Critical Thinking For the final portfolio complete the accurate computation of statistics. This includes the use of quantitative methods utilizing professional analyses and critical thinking; including geometric mean, terminal wealth, standard deviation, Beta, value at risk, information ratio, etc.
Explain how you measured return against risk for the Portfolio.
Part VI Conclusion What was the performance within each asset classification compared with a benchmark? Describe your success (or lack of success) in diversifying the Portfolio. Did your Portfolio make a profit or loss? What were the most important things you learned from the construction and management of the portfolio?
Part VII: Research Approach and Use of Professional Sources of Information and Data Use at least four scholarly research sources and reference the significance of the research information and data Use of APA citations and the APA format for URL links Appendices can be used for charts, graphs and figures.
All appendices should be labeled and referenced in the body of the report. A list of the appendices are included in the Table of Contents Portfolio Management Project -
Question 1: a. Present, discuss, and explain the investment policy for the portfolio.
b. What were the returns during the period you managed the portfolio?
c. What returns do you expect the portfolio would produce over 1 year? 5 years? And why?
Question 2: a. Explain how the investments that were selected are consistent with the investment policy statement?
b. What changes would you recommend for the investment policy statement?
Question 3:
a. What is the beta of the stock portfolio and is it consistent with the risk objectives in the investment policy statement?
b. Would you recommend that the portfolio assume more, or less, risk? Why?
Question 4: What were the most important things learned from the construction and management of the portfolio?