Capital Management Essay

4434 Words Mar 25th, 2012 18 Pages
Statement of Investment Objectives
We at Griffin Capital Management aim to provide excellent returns to our investors by minimizing volatility risk and exceeding the performance of the S&P 500 plus five percentage points. The two main objectives of our portfolio managers are to provide consistent returns and protect our investors from the loss of capital. Due to asset allocation restrictions, this portfolio will not hold any ETFs, bonds, mutual funds, and derivatives. Although these restrictions may hinder the amount of risk we can diversify away, we still aim to eliminate all unsystematic risk and provide our investors a compensation for systematic risk. The purpose of this portfolio report is to provide transparency to our investors
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At this point of the portfolio construction, the portfolio only contained roughly 12 stocks, which later became apparent that we lacked diversification. Due to the lack of diversification and inadequate performance, the team decided to modify the investment strategy by incorporating techniques taught in Prof. Vu’s class as well as strategies of other fund managers.
Investment Style After long hours of research and meetings, our investment team decided to reevaluate our investment style and strategy. We began this modification by brainstorming which target market our portfolio would capture. Due to our asset allocation of 95% in equity and 5% in money markets, we as a team decided that we would target young adults between the ages 27-35 who are comfortably with taking on more risk. After determining our portfolio’s target market, we began rewriting our investment style to give our investors a better idea of how we plan to operate. Our team came up with the following four points: * Opportunistic bottom-up approach incorporating both stock and sector views with macroeconomic overlay * Market-capital agnostic allowing for higher flexibility in exposure to broad range of potential assets. * Hold stocks that develop a near-term catalyst within a period of 6 to 12 months * Significantly increase the cash level of our portfolio during bearish times of increasing volatility and market corrections.
Our team

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