End of Term Portfolio Management Assignment Introduction Given that a significant portion of this course dea
ls with optimal portfolios and portfolio management , you are tasked with setting up a portfolio manageme
nt strategy for a hypothetical client. This end-of-term project serves multiple objectives including reinforcement and application of the course material. In addition, through your proficiency of setting up the portfolio, I can determine the extent of learning and progress you have made throughout the semester. Portfolio Challenge After years of hard work as a junior level portfolio manager, you are trying to convinced a group of 30 investors to give you control of a combined $350 million to invest and manage. In the past, you have worked for a mutual fund, a hedge fund, and a large state pension fund. As such, you have plenty of experience in many different market environments and many different fund set-ups. Your job is to write up a proposal to these investors on how you would manage their money. As is seen in this course, this decision is more involved than simply choosing between 75% in stocks and 25% in
bonds. Rather, one must have the proper fund set up , the proper dynamic allocation scheme that responds
to market conditions, a proper monitoring mechanism , a proper portfolio management compensation fee,
and so on. Your objective in this report is to specifically detail how you would manage this group’s money. While you will want to include the concepts and information presented in the course’s lectures and readings, you will want to refrain from presenting any information not directly relevant to convincing these investors to trust you with their money. Remember: you are trying to convince people to give you their money. You want to give them the facts, but n
ot bore them. A good beginning guide for the end product can be found in Chapter 28 (especially section 28.3:
Investment Policy Statements) although you are encouraged to include any additional information that you feel is relevant, informative, and most importantly, does not waste the time of your very busy (and very rich) clients.
Expectations The end result of your efforts should be a ten to twenty page (double spaced) report that details your
investment vehicle structure (e.g. a mutual fund, hedge fund, etc.), your asset allocation strategy, your risk
management strategy, your reporting system (to fund owners, federal/state government agencies, as well
as internally), how you will be compensated, and any other item that may be pertinent and relevant.
Note that any strategy should be backed up by common sense as well as the good investment principles
introduced in (and throughout) the course. Thus, if you make a claim, you should be able to back it up
with something learned in the course. Remember, the potential investors (I) will be judging your strategy
not only on what you say, but who else says so (as in the book, lecture, or some other documented source)
and how you say it (clarity, grammar, style and pre sentation, etc.).
This is an open ended assignment so feel free to be creative as long as said creativity is tempered with
sound and logical financial thought/principles. Also, your final report should be nothing less than
absolutely professional and polished. Finally, you are recommended to start as early as possible, to get
feedback from both myself and your peers, and to give yourself the time necessary to create a good report.