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The investment manager has
decided to invest $10,000 into different stocks of the renowned corporations.
The investment decision is taken after evaluating the risk & return of the
stocks. The stocks of those corporations are selected which are providing
significant amount of return and generating significant amount of return. The
Asset Allocation & performance of the portfolio are explained in the
following sections in detail.
Asset Allocation of
The 25% allocation is made in the
stocks of Apple corporation.25% assets are allocated to Microsoft Corporation
because of its good return policy. 15 percent asset allocation is being made in
the Alphabet Inc. stocks. All of these corporation are working in the IT
industry and generate significant amount of profit. The last two stocks in
which the organization has decided to invest belong to the Retail industry. 25%
assets are allocated to Walmart Inc. & 10 investment is made in Target
Corporation
Goal/Aim of Portfolio
The aim or goal of the portfolio
creation is to maximize the Sharpe Ratio. The asset allocation for the maximum
Sharpe ratio is presented in the above table
The expected return of the current
portfolio 27.64%. The Compound annual growth rate (CAGR) is 26.42%. It means
that the portfolio is generating significant amount of return. The Standard
deviation is 14.47% which is showing risk of the portfolio. However, the level
of risk is not much higher
Risk & Return Matrices of
The above table is showing the
level of risk of the provided portfolio. The beta of the portfolio is 0.92 whereas
the Sharpe ratio of the portfolio is 1.61. Overall it can be said that the portfolio
has lower level of risk
The portfolio have generated
significant amount of return in the 1 year period. However by changing the
investment policy the investor can restructure the portfolio to generate even
more return
References of
Higgins. 2007. Analysis for Financial Management.
Tata McGraw-Hill Education.
Pandey, I.M. 2015. Financial Management. Vikas
Publishing House.
SINHA, GOKUL. 2012. FINANCIAL STATEMENT ANALYSIS .
PHI Learning Pvt. Ltd.
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