KING’S OWN INSTITUTE*
FIN201 INVESTMENT MANAGEMENT T220
The assessments for this subject are described below. The description includes the type of assessment, its purpose, weighting, due date and submission requirements, the topic of the assessment, details of the task and detailed marking criteria, including a marking rubric for essays, reports and presentations. Supplementary assessment information and assistance can be found in Moodle. KOI expects students to submit their own original work in both assignments and exams, or the original work of their group in the case of group assignments.
Note: Changes to the method / mode of assessment can only be made in accordance with KOI Assessment Policy and with the authority of the KOI Academic Board. Any changes will be formally advised to those students who may be affected.
Assessment Type: Case Study – individual assessment. 2,500 +/- 10% words.
Purpose: To allow students to demonstrate an understanding of the various portfolio investment analysis techniques applicable to real world situations, enabling them to construct an investment portfolio, analyse the expected and actual performance of the selected securities and the overall portfolio against a market benchmark. Students will also be expected to review the performance of the portfolio after a period of substantial market volatility, and communicate their findings. Including any new recommendations, in a written report. The assessment will reflect the advice that would be expected from students, if, after graduation, they are working in a modern accounting practice. This assessment relates to learning outcomes a, b, c and d.
Topic: Portfolio Construction and Review: The Economic and Investment Outlook at the End of 2019, Construction of a Diversified Investment Portfolio at that date, and a Review in September, 2020 of its performance.
Task Details: Imagine that you graduated a year ago, and joined a firm of accountants and investment advisers.
On 31 December, 2019, a client, Miss Jean Brown, a single lady born on 30 December, 1954 and who has just retired, seeks your investment advice. She tells you that she owns her own apartment in Balmain, worth $1,000,000, in which she intends to live for the rest of her life. She has used her life’s savings to pay off the mortgage on her apartment and now has no debts. She also has no income, no superannuation, no other savings and has no dependants. However, she has just inherited $2,000,000, which she wishes to invest in a diversified investment portfolio, and seeks your advice on its construction.
She wishes the portfolio to provide an income of $70,000 a year, which will enable her to live comfortably in retirement, including paying for an annual overseas holiday. She says she is in good health and expects to live at least for another 20 years.
After questioning, you assess that she has a moderately conservative risk profile, and wishes to spread her funds across the four main asset classes of Australian securities, namely, Australian company shares, Australian listed property trusts (or REITs – real estate investment trusts), Australian fixed interest securities (Commonwealth and State Government bonds) and Australian cash or equivalents
(e.g., cash at bank, Treasury notes, and bank bills). She is willing to invest up to 50% of her inheritance in risky assets (company shares and listed property trusts) and the balance in fixed interest and cash. To provide a measure of diversification, she wishes to invest in three different securities in each asset class.
Because of exchange rate and other risks, she does not wish to include any foreign or overseas assets or alternative investment assets in her portfolio. On her death, she wishes to have, if possible, more than $2,000,000 (plus her apartment) in her estate, which she plans to leave in equal proportions (50% each) under her will to a niece and to the Red Cross (an international charity).
You are required to prepare a three-part report; each part of which Miss Brown accepts and implements.
Part A of the report, following the Introduction, is a literature survey or review of selected reference books, articles, web-sites and other sources used in the preparation of the report.
Part B of the report is the preparation of a Statement of Investment Advice to Miss Brown, specifying:
Part C of your report will embrace a review and evaluation of your recommended portfolio in September, 2020. It is likely that some at least of your recommendations have been adversely affected (and possibly some enhanced) by the coronavirus (Covid-19) pandemic and the impacts of government policy seeking to limit the spread of the virus and the resultant economic and investment outcomes.
This part of your report should include a summary of these effects, a current valuation of the original recommended portfolio, a review of the income provided by the selected assets, and a discussion of their suitability for the investor, going forward. Also include reasons for any recommendations for switching investments (selling some of the original assets and replacing them with new ones, together with a revised estimate of future annual income and estate size.
NOTE: In your calculations and report, ignore taxes, brokerage and any investment advice regulations.
Presentation: 2,500 +/- 10% words, in short Report format. The word count excludes the coversheet, contents page, references, appendices, and illustrations (e.g., diagrams, graphs and tables).
Students need to stay within the assigned word limits, and indicate the word count on the cover page of the Assignment. Marks will be reduced for Assignments shorter than or greater than the minimum word count.
Every page should be clearly numbered. The Assignment, when lodged, should include the following, in order:
literature review should be source referenced with “(Author(s), date of publication and page number(s)”.
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