Investment Strategy

Question 2

An investment strategy based on funds. 65% of the grade, 3000 words

To answer this question you are to develop an investment strategy specifically for yourself, and as realistic as possible, and reflecting your view of macro-economics and its impact on financial markets.

First analyse your own situation and risk profile (character, life-style, time horizon, objectives, etc) and then your macro-economic view, which should spell out your view of global economic trends and how they affect your choice of funds.

Then, as a reflection of your risk profile and economic view, determine your asset allocation and justify it. That implies the mix of shares, bond, possibly commodities and cash. Select a portfolio of mutual funds or ETFs using examples and providers chosen from David Costa’s book.

Normally five to seven mutual funds and ETFs funds will suffice for diversification. Bring an element of timing into your investment plan.

You are not obliged to use ETFs only or Funds only; make you choices and say why. That will require you to describe the funds and the rationale for including them in your portfolio.

Note that for this exercise you may not include stocks or bonds directly in this portfolio, only ETFs or Funds. To fully address the question you need to produce a portfolio similar to the ones presented in the textbook and the video lectures.

Question 1: Invest in a bond: 15% of the grade, 500 words

Select a government or corporate bond and explain why you picked that particular bond and what your estimated return will be if you hold the bond till maturity.