This investment recommendation is made due to your recent request to provide
you, Mr. Gorham an optimal investment strategy. The report and its tailor made advice on a certain investment strategy are based on your personal evaluation and backgrounds, provided during our meeting in March 2006. Regarding capital appreciation as you major investment objective, your portfolio will consist of an appropriate mix of securitized assets. To achieve maximal capital appreciation due to your medium-risk tolerance level it is necessary to analyze the different asset categories used, to maintain risk-reward comparisons. During the allocation of the portfolio’s asset categories, a compromise is needed to between maximum return and risk avoidance.
Inhaltsverzeichnis (Table of Contents)
- Terms of Reference
- Underlying Assumptions
- Asset Categories
- Equities
- Bonds
- Property
- Cash
- Risk and Return
- Risk and Return Trade-off
- Personal Risk Tolerance
- Risk Adjustment, Measurement and Analysis
- Portfolio Management Techniques
- Active Management Approach
- Technical Analysis
- Fundamental Analysis
- Passive Management Approach
- Explanatory Statement of our Choice
- Investment Recommendation
- Asset Allocation
- Expected Returns
- Hedging Tools
- Behavioural Approach
- Compendium
Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)
This investment brief aims to provide Mr. Gorham with an optimal investment strategy tailored to his individual needs and risk tolerance. The primary focus is on achieving capital appreciation, balancing risk and return to maximize returns within a medium-risk tolerance level.
- Asset Allocation and Diversification
- Risk Management and Risk-Return Trade-off
- Portfolio Management Techniques (Active vs. Passive)
- Investment Recommendations and Hedging Strategies
- Behavioral Finance and Investor Psychology
Zusammenfassung der Kapitel (Chapter Summaries)
- Terms of Reference: Outlines the scope and purpose of the investment brief, referencing the client's (Mr. Gorham) specific requirements and the underlying assumptions based on his provided information.
- Asset Categories: Discusses the different asset categories (Equities, Bonds, Property, Cash) considered for inclusion in the portfolio, highlighting the need for a balanced mix to achieve capital appreciation while managing risk.
- Risk and Return: Explores the relationship between risk and return, addressing Mr. Gorham's medium-risk tolerance level and emphasizing the importance of risk-reward comparisons when selecting investments.
- Portfolio Management Techniques: Presents a comprehensive analysis of active and passive management approaches, including technical analysis, fundamental analysis, and a detailed explanation of the chosen strategy.
- Investment Recommendation: Outlines specific investment recommendations, including asset allocation, expected returns, hedging tools to mitigate risks, and a discussion of behavioral finance principles influencing investment decisions.
Schlüsselwörter (Keywords)
This investment brief focuses on key concepts such as capital appreciation, risk management, asset allocation, portfolio diversification, active and passive management strategies, expected returns, hedging tools, and behavioral finance.
Frequently Asked Questions
What is the primary objective of this investment strategy?
The primary goal is to achieve maximal capital appreciation for Mr. Gorham, balanced against his medium-risk tolerance level.
Which asset categories are included in the portfolio?
The portfolio considers a mix of equities, bonds, property, and cash to maintain a risk-reward balance.
What is the difference between active and passive management in this brief?
Active management involves techniques like technical and fundamental analysis to outperform the market, while passive management typically tracks market indices. The brief evaluates both to recommend the best choice for the client.
How is risk handled in the recommendation?
Risk is managed through asset allocation, diversification, and the use of specific hedging tools to mitigate potential losses.
What role does behavioral finance play in the strategy?
Behavioral finance principles are used to understand the psychological factors influencing investment decisions and to tailor the strategy to the client's personal background.
- Quote paper
- Honours Bachelor of Arts Business Management Jonas Schirm (Author), 2006, Portfolio Investment Strategy - Investment brief for wealthy private customer, Munich, GRIN Verlag, https://www.grin.com/document/57357
