Investment Strategy and Portfolio Management Essay examples

2389 Words Mar 30th, 2012 10 Pages
Investment Strategy and Portfolio Management - Case of study: Kaplan Capital


For organisations operating in unpredictable and competitive markets, it becomes a challenge for fund managers to create an optimal investment portfolio for their companies and their clients. Fund managers are presented with various prospects in emerging markets, equities, real estate, corporate bonds, government bonds, hedge funds, financial derivatives, and other alternative investments options. With such a diverse investment market, it becomes increasingly complicated for fund managers and other investors to shape, manage and monitor investment portfolios. This report presents a discussion on the future strategic asset allocations which
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This will reduce the profitability of the company and also reduce the funds available to refund the contributors. It is therefore proposed that Kaplan Capital Company adopts an international portfolio asset allocation in order to increase the diversification of its investments against systematic risks in the local market and make more gains by investing in the best performing assets in the international market. The proposed international portfolio asset allocation is expected to earn the company a profit of £3.25 million (refer table 2- appendix). This will be achieved by investing in Equities in the NYSE, Eurobonds, Germany Mutual funds, UK corporate bills and cash and short-term instruments in the UK market. It is therefore proposed that Kaplan should dispose its current portfolio assets and adopt the proposed strategic investment plan.

Certainly, the suitable asset mix for different investors depends on various factors such as financial goals, risk tolerance and time horizon. Financial goals of the company will determine how the company will apportion various investment assets in a portfolio. In the case of Kaplan Capital, it expects a considerable cash outflow from June 2012, by the initial contributors. In line with its financial goals, the company had allocated a large proportion of its portfolio to equities and bonds, which are deemed to give good returns in the long-term.

The company’s risk acceptance is a very important factor in

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