Executive SummaryThe report has been prepared for Brown Investments to provide an Investment Policy Statement for capital appreciation at an accepted level of risk maintaining the confidence of investors. A diverse range of asset classes are used in the policy statement in making a portfolio for Browns Investment.
The report consists of three parts; (i) construction of the Investment Policy Statement including investment objectives, target return of proposed portfolio, risk, constraints, investment guidelines, strategy and its suitability; (ii) methodology used, computation and construction of portfolio; and (iii) performance evaluation.
Sources of information used in this report are authentic and mainly from reliable sources. The security data and other relevant figures of data are from authentic sources such as ASX, RBA and ANZ bank.
The Treynor and Sharpe ratios are positive. The excel solver has been used to calculate the weights of the securities and other relevant information.
The return (approximately) from the portfolio is less than the target return of 15% and below the market return.
Gold Bar and Investment Jewelry
Investment
English: Return on Investment analysis graphHowever it is not possible to evaluate the performance of the portfolio on the basis of 8 weeks as the evaluation should extend over several years and cover at least a full market cycle as the time frame considered for the portfolio which is medium to long term. In addition the portfolio manager is being constrained by the availability of merely 15 securities, limited funding and not being able to short sell. Further the benchmark ASX 200 is considered a realistic proxy for the portfolio which unfortunately does not represent the true composition of the market portfolio as it includes only common stocks listed in the Australian stock exchange and excludes other risky assets that theoretically should be considered.
1INTRODUCTION1.1BackgroundBrown investments are a professional fund management concern. For the purpose of this report a...