CASE STUDIES IN FINANCE (FIN3CSF) – SEMESTER 2, 2018
CASE STUDY 5: INVESTMENT PORTFOLIO PERFORMANCE EVALUATION
As part of the quarterly review meetings that your stockbroking company conducts with clients, you are required to prepare a performance summary and review document assessing the investment strategy and the performance of the resulting investment portfolio that was proposed for the client in Case Study 1. This portfolio review document is to be completed based on market and security information as at Oct 16th 2018, and should include the following components:
A summary of the global, economic and industry environments relevant to the equity market sector generally and the proposed investment strategy and the recommended investment portfolio structure specifically, if relevant, during the investment period.
An overall summary of the investment portfolio outcome for the approximate three-month period. This should include determination of the value of each individual portfolio component as at Oct 16th 2018 and, from this, the overall value of the portfolio as at Oct 16th 2018. The overall portfolio outcome should be presented in table, or similar interpretable, format as part of the summary analysis.
Identification and discussion of the investment components which were significant contributors to, or detractors from, variation in the portfolio value and portfolio performance over the 3-month period, and any specific explanations for the movement in these components.
A quantitative review of the performance of the investment portfolio using recognised portfolio performance measures, as well as performance comparison to index or other benchmarks.
Recommendations for any future modifications to the portfolio structure or individual investment components within the portfolio, with appropriate justification provided.
The value of the investment portfolio as at Oct 16th 2018 should be determined based on the following information:
Searching for all closing share and other security prices on Oct 16th 2018 from the sources provided in the case study 1.
Information on dividend payments or other distributions associated with shares or securities will also be provided and these should be reflected in portfolio value changes.
Short sales positions are closed out on Oct 16th 2018 (by purchasing the relevant shares or securities at the closing prices on Oct 16th 2018), with the purchase proceeds coming from the balance of the cash management trust account.
Futures contract positions are assumed to be closed out on Oct 16th 2018 by entering into an offsetting futures contract on the same underlying index product.
Index call or put options are assumed to be sold on Oct 16th 2018 at the prevailing closing option security prices on this date.
Interest will be paid on the balance invested in the cash management trust account on Oct 15th 2018, prior to any disbursement of this cash holding for the closing out of short sales positions.
For any students that had problems with the correct or appropriate composition of an investment portfolio as part of Case Study 1, corrections can be made to the portfolio for the purposes of accurately completing the Case Study 5 requirement.
This case study report is due to be submitted to the client in preparation for their review meeting by 6.00pm on Wednesday 31th October 2018, via the FIN3CSF LMS site. This case study contributes 20% to the overall final assessment in the FIN3CSF subject. This case study is to be completed individually. The maximum word limit, excluding any figures, calculations and the portfolio presentation, is 1,500 words. There is no minimum word limit, however you need to make sure your description and explanation is clear and concise.