Evaluation Of A Suitable Type Of Asset Allocation

Basics: age & income & specific responsibilities in life matter in the mix of assets in one’s portfolio.

At Karvy we help you to construct a portfolio factoring in your risk profile and your future financial needs, so that your investments achieve an optimal balance between risk and returns.

This was a simulation project related to application of different tools of portfolio management. The project was applied by using stocktrak.com platform. This website provides the students and teachers with a real time simulation platform for learning the portfolio investment. A specific allocated amount was used in this simulation project for portfolio investment. A portfolio was created of different securities like stocks, bonds and currencies. These bonds and securities were from different sectors of economy like technology industry, financial industry, consumer goods industry, services industry, health industry, industrial goods industry, utilities industry, and basic materials industry. The top performing stocks in this simulation project were Bank of America Corporation, Hersha Hospitality trust, Deans Food Company, Loews Corporation, and Pepsi Co Inc. The study also found that the percentage return on portfolio remained above the return realized on Dow Jones ETF during the timeline of the project.

With Reference to this statement, describe, discuss and illustrate the principles of portfolio theory. Your essay should include coverage of the Markowitz Efficient Frontier and the Capital Market Line.

The lower the risk that is associated with an investment, that investment usually has a potential for lower returns. Conversely, if there are high levels of risk associated with an investment, and in turn a potential for a higher return.

Asset allocation is one of portfolio management 's primary concerns. Asset allocation answers several questions. What risk-return trade-off are we comfortable with? In other words what amount of risk are we prepared to take to make a certain level of active return? At every level of active return there is an equivalent amount of risk. Many portfolio managers are judged merely on the return they have achieved without subsequent analysis of the risk they took to produce that return. This is the reason why we have seen the advent of new rogue traders like Kweku Odoboli. These traders want to make positions that give a certain amount of return so as to meet their stringent benchmarks.

I strongly advocate tactical asset allocation process and diversification over several different income and growth strategies. I believe that risk management and protection of investor's endowment are major objectives. In my portfolio, stocks may occupy a large portion and the

o It is highly recommended to minimize the number of different financial assets selected for the portfolio. It is

In the case study, Fastsave is a retail chain store company that was doing quite well, and had more than enough financial resources to make investments. In other words, they are able and they have the capacity to take risks with no significant danger of losses. The real risk here was whether it would be worth it for them in terms of time and effort. The attitude to risk is also based on individuals who personalities vary. In the case study, individuals who are more reserve tend to be more cautious as they are realistic while the others who are more risky or outgoing tend to be more straightforward as they maintained an optimist

The portfolio management process has several steps or parts to the process. The idea behind portfolio management is to choose

The purpose of portfolio is to provide safe and stable growth of your investment capital until you reach the age of retirement. The portfolio will also be able to ensure that you have enough income to

Q3. Suppose you want to add commodities into your investment opportunity set in addition to cash, domestic equity, and domestic bonds. What is your optimal asset allocation decision in this case, i.e., how should you allocate your fund across cash, domestic equity, domestic bonds, and commodities? What is the Sharpe ratio of your optimal complete portfolio?

At one point or another odds are that individuals have thoughts about that one investment that will make them rich quick. Then the reality of it all sinks in and thoughts of getting rich quick are instead replaced with concerns about the potential possibility that the investment could yield one losing everything or even just the uncertainty of it all. There is a name for this in the finance investment world and it is called; risk. Authors Besley & Brigham of the text book CFIN 4, 4th Edition explain, “Although most people view risk as a chance of loss, in reality risk occurs any time we cannot be certain about the future outcome of a particular activity or event. Consequently, risk results from the fact that an action such as investing can produce more than one outcome in the future.” (Besley & Brigham, 2016, pg. 126). When it comes to investing and the level of risk associated, an individual should know as much as possible about that investment and if one is unable to obtain such information, it should be carefully considered to determine if the investment is worth the risk, as illustrated in the below scenario.

Personal investment is defined as an individual invest and manage their own financial instrument, such as, stocks, bonds, property and others. This personal investment is in aims of improve the liquidity and efficiency of the equity and capital of the individual. Basically, the individual investors have to develop their own investment plan and framework based on different characteristics of the individual investors. This is because the personal investment is very subjective, whereby it is totally based on the characteristics and the degree of risk tolerance of the individual investors. However, before investing into the financial instruments, the individual investors should develop an investment plan and strategy. This

Asset allocation refers to the division of any investment portfolio into various different categories of assets like cash, stocks or equity and bonds (fixed assets) and which largely rely on various factors such as risk tolerance, goals of the person and time horizon (James, 2016). Determining which process to engage in when choosing the right mix of assets for holding in your portfolio depends on every individual and what type of investment they would like to engage in. When looking at what works best for each person in terms of asset allocation at any given time period in one’s life largely relies on the individual’s ability of risk tolerance that is the individual willingly to risk and also depends on the time horizon of the person whether that time period best suits a particular investment portfolio. Time horizon refers to the number of days, months, or accumulation of years that a person will take to invest in a particular investment portfolio in order to achieve a specific goal financially. For example, an investor that has a time horizon that is longer will more than likely want to engage in an investment that is more volatile and riskier since the person can withstand the ups and downs that are inevitable within the market and also the slow cycles of the economy. Risk tolerance refers to the willingness and ability of an individual to lose a part of the original investment of even all of it in exchange for a particularly bigger return