This report sheds light on evaluation on a balanced type fund – Investment Trust combined with investment and portfolio theories. Past performance in respect to capital gains, dividends yield and interest income of the portfolio has been calculated, measured and discussed. Although the fund had achieved higher return yield compared to that of FTSE ALL SHARE INDEX for the corresponding investment period, it still suffered from a series of deficiencies in terms of asset allocation proportion and investment type selection which may not comply with its aims of maximizing income without impacting unduly on long term capital returns. This report has also identified and measured both systematic risk and unsystematic risk of the Investment Trust and provided recommendations for proper changes to the existing portfolio so as to better realize its investment aims.
Table of Content
1.0 Introduction
2.0 Measurement and discussion on the performance of the fund
2.1 Brief introduction to the portfolio on the inception date
2.2 Fund Performance measurement and critical discussion
3.0 Risk identification and measurement
3.1 Systematic risk
3.2 Unsystematic risk
4.0 Recommendations for changes to existing portfolio
5.0 Conclusion
Objectives and Topics
This report evaluates the performance of a balanced Investment Trust fund between January 1, 2011, and March 18, 2013, by analyzing its capital gains, dividends, and interest income against market benchmarks. It aims to determine if the portfolio successfully maximized income and long-term returns while effectively managing systemic and unsystematic risks.
- Performance evaluation of stock and bond holdings
- Measurement of systematic and unsystematic financial risks
- Assessment of portfolio asset allocation strategies
- Comparison of portfolio returns against the FTSE ALL SHARE INDEX
- Strategic recommendations for future portfolio diversification
Excerpt from the Book
1.0 Introduction
Accompanied with acceleration of property and wealth accumulation, increasing amount of idle cash had been invested into diversified types of assets including bonds, shares and derivatives etc. Nonetheless, while it often takes considerable energy and abundant expertise for investors to manage their assets, investment funds will provide specialized management and satisfy different risk preference of investors. As different types of fund possess distinct returns and risks, this report will focus on the management of an investment trust fund from the inception date on 1st January, 2011 to the cutoff date on 18th March, 2013, which included eight UK stocks, two treasury, one loan and residual cash sourced from Datastream. Due to balanced objective of the investment trust which tries to realize maximization of income without impacting unduly on long term capital returns, this fund will diversify its investment options and ensure both its security and value addition.
As a fund manager, this report will firstly measure and discuss the fund’s performance such as capital gains, dividends and interest income from 1st January, 2011 to 18th March, 2013 under 1.5% Annual fee taken on 31st December each year. Then it goes to identify and measure (where appropriate) main risk inherent in the portfolio which may stop the fund in realizing its objectives in respect to stock risk and asset allocation. Finally it will make some recommendations for appropriate changes in the portfolio so as to realize its initial aim of maximisation of income without impacting unduly on long term capital returns.
Summary of Chapters
1.0 Introduction: This chapter outlines the purpose of the report, the scope of the investment analysis, and the objectives of the Investment Trust.
2.0 Measurement and discussion on the performance of the fund: This section details the portfolio structure at inception and analyzes the capital gains, dividend yields, and interest income generated over the study period.
3.0 Risk identification and measurement: This chapter identifies the systematic and unsystematic risks associated with the portfolio's assets, using beta coefficients and P/E ratios to assess market risk and company-specific performance.
4.0 Recommendations for changes to existing portfolio: This section proposes adjustments to the asset allocation and diversification strategy to better align the portfolio with its balanced investment goals.
5.0 Conclusion: The final chapter summarizes the portfolio's performance, acknowledges its strengths and weaknesses, and reiterates the need for strategic improvements.
Keywords
Investment Trust, Portfolio Management, Asset Allocation, Capital Gains, Dividend Yield, Systematic Risk, Unsystematic Risk, Beta Coefficient, P/E Ratio, FTSE ALL SHARE INDEX, Market Volatility, Risk Diversification, Fixed Income Securities, Financial Performance, Investment Strategy
Frequently Asked Questions
What is the primary purpose of this report?
The report aims to evaluate the performance of a balanced Investment Trust from January 2011 to March 2013 to determine if it successfully met its objectives of maximizing income and capital returns.
Which key thematic areas are covered?
The core themes include portfolio performance measurement (capital gains, dividends, interest), risk identification (systematic and unsystematic), and strategic asset allocation recommendations.
What is the central research question?
The research seeks to determine whether the existing portfolio structure effectively realizes the fund's balanced investment aims and how risk management strategies can be improved.
What scientific methods are utilized for the analysis?
The analysis employs financial performance metrics, beta coefficient calculation for systematic risk assessment, and P/E ratio valuation for evaluating unsystematic stock risk, combined with a comparison against the FTSE ALL SHARE INDEX.
What does the main body of the work cover?
The main body examines initial portfolio composition, provides a detailed breakdown of asset returns, assesses financial risks, and outlines necessary changes to the current investment distribution.
How is the work characterized by its keywords?
The work is defined by its focus on investment management, risk evaluation, and asset allocation, utilizing quantitative financial metrics to guide strategic decision-making.
How did the fund perform relative to the FTSE ALL SHARE INDEX?
The report finds that the fund achieved a 20.90% accumulated return, which significantly outperformed the FTSE ALL SHARE INDEX return of 9.22% during the same period.
What are the primary recommendations for the portfolio?
The report recommends increasing diversification by adding new asset classes like property and gold, and rebalancing the equity-to-bond ratio to better reflect a balanced fund profile.
- Citation du texte
- Kim Clay (Auteur), 2012, Investment trust management, Munich, GRIN Verlag, https://www.grin.com/document/270199
