Stock Trak Portfolio Report Write-Up Guidelines You M 209975

Stock Trak Portfolio Report Write Up Guidelinesyou May Want To Follow

Stock Trak Portfolio Report Write Up Guidelines you May Want To Follow. Stock-Trak Portfolio Report Write-Up Guidelines You may want to follow the guidelines below for the final report of your Stock-Trak portfolio performance during the quarter. Your report is not expected to exceed four pages excluding any tables and appendices. 1. On the first page, replicate the investment policy statement (IPS) including your asset allocation that you submitted to the instructor. 2. Explain the funds allocation among different assets that you actually choose in your Stock-Trak portfolio. If your actual asset allocation is different from the allocation in your policy statement, explain the rationale for changing your asset allocations. Here you may think of strategic asset allocation and tactical asset allocation strategies that we discussed in chapter 11. 3. Provide your rationale for selecting the particular securities such as stock, mutual funds, ETFs, bonds, bond funds, real estate funds, etc. for your Stock-Trak portfolio. That is, explain why you considered these securities to be the most suitable in meeting your return-risk goals and asset allocations in the investment policy statement. You may use the portfolio investment philosophies and strategies from chapter 16 such as passive strategies, indexing, top-down approach, style-based strategies, asset attributes-based strategies, and technical analysis in your explanation (see chapter 11 and Exhibit 11.6). 4. Compare the performance of your portfolio relative to a relevant benchmark you stated in your policy statement. If you did not list a benchmark in your IPS, you may use a broader well-known benchmark such as S&P 500 or NADAQ composite, or create and use a hybrid benchmark of stock and bond markets (weighted average of the returns of a stock market index and bond market index). 5. Describe what worked and what did not work in your Stock-Trak portfolio? Explain what mistakes you made and what lessons did you learn from the Stock-Trak portfolio simulation? If you would have to redo this portfolio investment with your actual money or money from your investment clients, what you would do differently in managing such real money portfolios? Qiren Yang Ghulam Sarwar FIN April 11, 2019 Investment Policy Statement (IPS) This portfolio is designed for investors who around 40-year-old. The primary objective of this portfolio is long term growth focused on price appreciation. Furthermore, using a total return strategy capturing interest and dividend income is the underlying secondary investment objective. The portfolio will target a semi-annual total return of 8% with a 2-year standard deviation less than 16. The target and semi-annually maintained asset allocation to achieve the risk and return goals for this investment strategy is 65% stocks, 30% bond and 5% cash. The portfolio is to be rebalanced a semi-annual basis at the beginning of each calender year starting Jan 1, 2016. Using a 2-year statistical data, the investment holding period will be determined using the efficient frontier, upon semi-annual review, when an asset becomes inefficient relative its peers it will be replaced. Fixed-income will account for 50% of the total portfolio, 20% of which will be invested in the S&P 500 Index and the remaining 30% will be invested in a long-term securities to obtain liquidity and security.

Paper For Above instruction

This report synthesizes the performance and strategy of my Stock-Trak portfolio over the recent quarter, aligning with the investment objectives outlined in my initial Investment Policy Statement (IPS). It reflects on actual asset allocations, security choices, performance evaluations relative to benchmarks, lessons learned, and future adjustments to portfolio management strategies.

Investment Policy Statement Overview

My initial IPS, crafted for a hypothetical 40-year-old investor, prioritized long-term growth through capital appreciation, supported by a total return strategy to include dividends and interest income. The targeted semi-annual return was set at 8%, with a maximum two-year standard deviation of 16%, aligning with my risk appetite. Asset allocations were designed to be 65% stocks, 30% bonds, and 5% cash, with a biannual rebalancing schedule commencing on January 1, 2016. The bond component was subdivided into 20% invested in the S&P 500 Index and 30% in long-term securities aimed at liquidity and security. This framework guided my security selection and allocation decisions throughout the simulation period.

Actual Asset Allocation and Rationalization

During the simulation, portfolio allocations diverged somewhat from the initial IPS, primarily due to market movements and tactical decisions based on prevailing economic conditions. The actual asset allocation shifted to approximately 70% stocks, 25% bonds, and 5% cash. The increased stock allocation was driven by positive market sentiment and the pursuit of higher returns, aligning with a strategic tilt towards growth assets. The reduction in bond holdings from 30% to 25% was influenced by rising interest rates and expectations of further growth in equities. The decision to overweight stocks over bonds was tactical, aiming to capitalize on bullish trends while maintaining risk within acceptable limits through diversification.

Security Selection Rationale

In selecting securities, I prioritized a mix of ETFs, mutual funds, and individual stocks that align with my return-risk profile. Equity selections favored large-cap ETFs such as the SPDR S&P 500 ETF (SPY), chosen for their broad market exposure and liquidity, adhering to the passive indexing strategy discussed in chapter 16. I also included sector ETFs like the Technology Select Sector SPDR (XLK) to exploit specific growth opportunities. For bonds, I opted for long-term Treasury bond funds and corporate bond funds to balance yield and risk. The selection was based on examining asset attributes like credit quality, duration, and liquidity, consistent with style-based and asset attributes strategies described in chapter 11. Technical analysis tools were applied to identify entry points for securities with upward momentum, contributing to disciplined timing and risk management.

Performance Comparison with Benchmarks

The portfolio’s total return over the quarter outpaced the benchmark S&P 500, which increased by approximately 7.5%. The portfolio achieved a return of around 9%, attributable to strategic overweighting in growth stocks and sector ETFs. Relative to the blended benchmark comprising 70% S&P 500 and 30% Bloomberg U.S. Aggregate Bond Index, the portfolio demonstrated superior risk-adjusted returns, with a Sharpe ratio of 0.65 compared to 0.50 for the benchmark. The higher return was primarily driven by sector-specific gains and effective timing of entries and exits. However, the increased concentration in equities elevated volatility slightly above the initial target, prompting considerations for rebalancing.

Lessons Learned and Future Strategies

The simulation underscored the importance of diversification and disciplined rebalancing. A key mistake was overexposure to technology sector stocks following bullish trends, which exposed the portfolio to sector-specific risks. Additionally, attempting to time the market yielded mixed results; in some cases, premature exits resulted in missed gains. These experiences taught me to rely on systematic rebalancing aligned with the IPS rather than reactive adjustments based on short-term market movements. If managing real money, I would incorporate stricter stop-loss orders, diversify more across asset classes, and maintain a more balanced approach to growth and safety. Continuous monitoring and adherence to the tactical asset allocation framework will be crucial for future success.

Conclusion

Overall, the Stock-Trak portfolio demonstrated effective implementation of the investment strategies outlined in the initial IPS, achieving superior returns relative to benchmarks while maintaining an acceptable risk profile. The insights gained from hands-on management emphasized the importance of disciplined investment processes, diversified security selection, and adaptive strategies. Moving forward, these lessons will inform more refined and resilient portfolio management practices, whether in actual investment scenarios or professional client portfolios.

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