The investment pool of Daly Capital includes as given:

· UK equities (20%),

· Middle East equities (20%),

· Chinese equities (10%),

· UK corporate bonds (15%),

· European corporate bonds (11%),

· European government bonds (10%),

· UK government bonds (10%),

· Cash and short-term instruments (4%).

The UK mutual fund has made the investments in various instruments in different markets. It still needs to evaluate the market conditions and the trends in order to earn the increased returns on the investments. There is a saying “higher the risk greater will be the return”. The same goes true for the UK mutual fund. It needs to make the decisions for making the investments in the diversified markets as well as in different securities and the instruments.

In case the UK mutual fund is to make the decisions regarding earning the more profits then it needs to make the investments in the stocks. It will return the UK mutual fund with the higher returns. It is more risky and it is not known when the price of the stock will go up or go down suddenly.

In case the UK mutual fund is intending to bear the less risk then it can make the investments to the treasury bills. They are the less risky instruments. But the return will also be les on this type of instrument. Also, it can change the percentages of the investment in already existing portfolio. The decision making is entirely based on the existing market conditions. The UK mutual fund is to determine the markets where it is getting the increased returns on the investments. It can better increase the investment ratio in these markets in order to get the increased returns (Degl'innocenti, 2017).

The long-term investments can better be broken down to the small and more risky investments. It will better help the organization to get the increased returns on already existing investments. During the lock in period as the investors are not allowed to sale their securities and withdraw their funds, these funds can be utilized for attracting further investments in the growing market places and the securities with more returns (personalfn, 2019).

The stocks, which provide with the continuously increasing dividends, can better be chosen as an option for investing further. It will help the UK mutual fund to reduce the effect of volatility. It can be said that for the stock with higher (continuously dividend), the volatility will be less. The UK mutual fund is required to add more bonds to the portfolio. In case the stock-bond ratio is 60%:40% respectively, it will provide the mutual fund with the increased annual returns with the half of the volatility. These returns can be 75% of the stock portfolio.

The high volatility securities need to have the reduced exposure. It will help the UK mutual fund to lower down the overall market risk. The other thing that can be taken into consideration in this regard is to take the offsetting position in a specified security or the instrument. It is the case of the hedging. The exchange trading fund is a better option for the said purpose. Any loss in the specified securities can have the offset with the gain in the inverse ETF (exchange trading fund) (Cfa, 2009).

In order to better cope up with the timing risk, the dollar-cost averaging and the Index fund investing are better options. In case of dollar-cost averaging, the fixed Dollar amount can be bought or sold along with the consideration of the fixed percentage of the portfolio or the security. It is done irrespective of the stock price. It will better help the UK mutual fund to purchase more shares when the price of the stock is low. On the other hand, at the higher stock price, the fewer shares will be purchased. As a consequence of the technique, an investor reduces the risk of buying at the top or selling at the bottom. This technique will be helpful for the UK mutual fund to protect the investments against the fluctuations to the market place as well as the downside risk factors. For the index fund investing, the case of “if you cannot beat them, just join them will be followed by the UK mutual fund. In this case, the index funds tend to present the market place as a whole (Bennyhoff, 2019) and (Donald, 2009).

In order to reduce the effect of overconfidence, the UK mutual fund is to spread the risks by diversifying its investments. The major advantage of diversification protects against losing everything at once. It is a good approach to have a minimum of the 10 stocks and the maximum of 15 stocks in the portfolio. Too much concentration exists for less than 10 stocks and more than 15 stocks show the increased difficulty level for the portfolio managers. The system should be so that it supports the automatic diversification (Taffler, 2012) and (Richard, 2010).

The investments are desirable to be made in the companies with strong good will. This is so because these companies will provide with the greater returns. The other significant practice is related to avoiding the borrowing. Rather make investments from the existing finances.

Active investment approaches of Investment strategy and portfolio management

Diversification of the assets and the securities. It will better help to reduce the risk.

Exploration

Identification of the steady growth opportunities from the increased revenues.

More exposure towards the international markets.

Getting more benefit from the low fees for the sale and the purchase of the securities and the stocks.

Adopt the strategies for the advanced portfolio management.

Purchase the additional shares by reinvesting the dividends.

Conduct the market research in order to better understand the market trends.

Passive investment approaches of Investment strategy and portfolio management

· To buy the large collection of the securities along with the long term holdings in the different regions and the market places.

· Having the decisions for not selling these long term securities under nay stresses circumstances.

· Depositing more and more in the brokerage account in order to buy the securities, stocks and the instruments.

· Try to keep the costs low to the possible extent (thebalance, 2019).

Recommendations for the investment management styles

            Under some specified circumstances, mutual funds are better suggested. So as is the case with the UK mutual fund. In case Daly Capital is to choose some other option, the best choice is the Use of the exchange traded funds (ETFs). This practice involves the payment of the trade commissions. But the expense ratio is much lower as compared to the mutual funds.

It is suggested to the UK mutual fund

· To fully consider the trends of buying and selling in the financial markets.

· To study the parameters of the surrounding environment on regular basis.

· To train the managers of the mutual fund on an ongoing basis. ·

To overcome the issue of the scarcity of the knowledge about the market through the market research.

· To diversify the investments more and more.

· To effectively market the funds by formulating the strategies.

· To detect the obstacles to the way of marketing the securities and the instruments.

Conclusion of Investment strategy and portfolio management

It can be said that Daly Capital (the UK mutual fund) can fulfill its objectives by relying heavily on the strategy of higher the risks, greater will be the returns. It will make the UK mutual fund to have more fund outflows (5% per annum) as compared to the fund inflows.

References of Alternatives for strategic and tactical asset allocations

Almazan, A. &. B. K. &. C. M. &. C. D., 2002. Why constrain your mutual manager. Journal of Financial Economics, pp. 289-321.

Bennyhoff, D. G., 2019. Time Diversification and Horizon-Based Asset Allocations. ReseacrhGate, pp. 1-10.

Cfa, D. G. B. a., 2009. Preserving a Portfolio ’ s Real Value : Is There an Optimal Strategy. Science Direct, pp. 1-25.

Cuthbertson, K. D. N. a. N. O., 2008. UK mutual fund performance: Skill or luck?. Journal of Empirical Finance, Volume 15, pp. 613-634.

Degl'innocenti, M. &. F. F. &. G. C. &. R. N., 2017. Competition and risk taking in investment banking. Science Direct, pp. 241-260.

Donald, B. a., 2009. Time Diversification and Horizon-Based Asset Allocations. The journal of investing, pp. 45-52.

morningstar, 2019. Purchase Constraints. [Online]
Available at: https://www.morningstar.com/InvGlossary/purchase-constraints.aspx

personalfn, 2019. Should you avoid mutual funds with a lock in period. [Online]
Available at: https://www.personalfn.com/fns/should-you-avoid-mutual-funds-with-a-lock-in-period

Richard, T. a. D. T., 2010. Emotional finance: the role of the unconscious in financial decisions. John Wiley and Sons.

Simutin, O. B. a. M., 2018. Leverage constraints and asset prices: Insights from mutual fund risk taking. Journal of Finnacial Economics, pp. 325-341.

Taffler, A. E. a. R., 2012. Fund Manager Overconfidence and Investment Performance: Evidence from mutual funds. Emerald Insight, pp. 1-31.

thebalance, 2019. The best passive investing strategy. [Online]
Available at: https://www.thebalance.com/diversified-passive-investing-strategy-357878

Zhdanov, E. M. a. A., 2018. Product market competition and option prices. JStor, pp. 1-55.