Investment Analyst Report of 20 Firms - Example

Investment Analyst Report Of 20 Firms By + Contents The potential gain or loss 5 Capacity 5 Current portfolio reviews 6 Current portfolio vs. desired risk 8 Target asset allocation 8 Risks and expectations 9 Recommended actions 9 Risk 10 Maximum likely loss and gain over 12months 10 Basic methods 10 The portfolio forecast 11 Introduction The core purpose of this investment analyst report shall be to provide the different types of firms with information to help them to fulfill their duty of care under the trustee Act 2000 when exposing the general power of investment and to make sure the investments retained by the firms are suitable and bear due regard for diversification where necessary. The following factors will influence the quality and suitability of different types of firms (Bobie & Kane 2011). This factor includes; The nature and terms of the different firms. The investment requirements of the trust and beneficiaries. The underlying taxation of the investment. The impact of administration cost. The risk profile and tax position of the executors and benefactors of the different firms. The amount obtainable for investment. The investment expertise and acquaintance of the trustees. Any significant principled or other investment considerations. The report does not give specific investment advice for the firms rather it gives recommended actions which should be put into considerations. If in the following of the considerations or recommendations highlighted in this report the trustee wish to receive specific advice and take any actions, it should be addressed as a different matter within the organisation or the trustees’ usual advisers. OBJECTIVES AND DETAILS. This investment report will mainly focus on the following firms AGGREKO ANTOFAGASTA ARM HOLDINGS AVIVA BP BRITISH AMERICAN TOBACCO EASYJET HSBC HDG. (ORD $0.50) INTL.CONS.AIRL.GP. (CDI) INTERTEK GROUP JOHNSON MATTHEY MORRISON (WM) SPMKTS. PETROFAC ROYAL DUTCH SHELL A(LON) SAGE GROUP SAINSBURY (J) SEVERN TRENT SMITHS GROUP VODAFONE GROUP WEIR GROUP The objective of these firms is to achieve long-term capital growth by investing primarily in emerging markets companies related to infrastructure and opportunities. Investments may include but are not limited to companies found in the transportation, capital goods, utilities, energy materials, telecommunication services and real estate sectors (Tapiero, 2004). The Risk assessments results According to the information gathered from various firms most managers have indicated their current situations for risk in regard to their trust. This assessment is conducted using a scale of options rated from different firms. This can also be completed with the risk profiling exercise which looks at the tradeoff between the risks incurred in investing and the potential returns. The risk profile Due to the results from the exercise of different firms, there is a selection of a risk profile that is considered to be the lowest category of the balanced investors of each firm. A balanced investor always looks for a balance risk and reward, seeking higher returns than those which are available from a high street deposit account and willing to agree a certain quantity of fluctuations in the worth of their investments as an outcome (Elton & Gruber, 2011). Therefore, they will feel uncomfortable if their investments were to fall in value significantly in one year. The preferred investment portfolio is likely to contain mainly low-risk investments such as cash and bonds with higher risk investment like shares of different firms. A portfolio like this should rise and fall in value less than a high-risk portfolio, the value of investments can fall as well as rise. The potential gain or loss In every risk profile, there is a sign of the variety of annual returns that may be encountered depending on the nature of investment held in a suitable range of assets for each risk profile for each firm. The values are not a minimum or maximum but are based on long-term historic returns for each asset group. The investor should keep in mind that investing involves various risks that are dependent on the type of strategic plans taken by the manager (Meucci, 2005). This can involve distressed or driven event plan long term and short term strategies. Capacity The part of the process of establishing your attitude to risk and determining the suitability of different potential investment risk profiles for the firms, it is important to put in mind what is known as your capacity of risk. Your capacity of risk refers to the degree at which the personal conditions and sentiments will influence on the specific investment pronouncements recommended. The following questions should be considered before engaging in this risk profile. When do you intend to use invested money? As a result, the nature of the chosen investment is long-term. Consequently, the portfolio shall be availed in a manner that enables it to provide more time to take into consideration the aspects of potential market volatilities that need to be evened out. In practice this implies that in the event that the volatility of the market shall result in the period of loss, greater opportunity shall be availed for market recovery; thus, allowing for more chances for investors to take risks. The other question is how much of this investment could you stand to lose without having a significant impact on your future objectives? While small losses could be tolerated, you should consider whether larger losses might substantially affect your future standard of living. You have to ensure you understand the range of possible results which might be displayed on the risk level selection monitor and their forecast. Finally, you need to know sudden access to a lump sum and how possible is it that you would need to spend on this investment hence providing you don’t need early access to this investment, items and issues around liquidity should not affect the risk you are able to consider and take. Current portfolio reviews The current portfolio review is made up of a variety of holdings and firms. Most discoveries have shown that asset allocation accounts for more than ninety percent of an investment portfolio‘s risk and return characteristics. This eventually includes diversifying investments between different asset types-especially equities, corporate bonds or cash equivalents and geographical areas to outline the investors goals and the risks tolerance. Within the classes of asset groups, further procedures of fund selection are required to be accomplished. However, this needs to be over the longer term given that the choice of fund matters less significantly than the class of the asset that it represents (Bodie, Kane & Marcus, 2011). The reviews and adjustments of the asset mix at regular intervals are also important. Different assets groups will perform at different rates, and their relative growth or shrinkage will alter the original asset allocation, leading to portfolio drift. The usual image of a portfolio of say the 20 firms is not much more funds than a list of their involved data. By contrast, the analytical facility sums all the available data on a selection of funds and superimposes the characteristics of the portfolio as a whole for the firms. The resulting report presents the analysis of the portfolio’s funds sectors, holdings assets groups and the previous performances for the given firms. Portfolio compositions (FIRMS) Firm holdings % of total A year % return AGGREKO 5.1 -27.5 ANTOFAGASTA 9.0 28.0 ARM HOLDINGS 13.2 25.1 AVIVA 9.6 38.1 BP 4.3 16.0 BRITISH AMERICAN TOBACCO 10.3 -1.8 EASYJET 11.5 63.6 HSBC HDG. (ORD $0.50) 8.8 26.1 INTL.CONS.AIRL.GP. (CDI) 4.0 11.1 INTERTEK GROUP 7.1 -5.6 JOHNSON MATTHEY 8.1 -55.6 MORRISON (WM)SPMKTS. 0.7 13.6 PETROFAC 0.9 -33.8 ROYAL DUTCH SHELL A(LON) 10.2 19.3 SAGE GROUP 5.6 -34.2 SAINSBURY (J) 3.2 20.7 SEVERN TRENT 2.2 17.4 SMITHS GROUP 0.4 - VODAFONE GROUP 12.1 -47.3 Total portfolio 100 3.2 Selected benchmark consumer price index +3% Benchmark –for the comparison of the ratios of the portfolio performance we have used an absolute one instead of relative to the market so as to assess the portfolio’s ability to maintain and maintain and grow the real terms value of the firm’s investment. In graphical views of the firms there follows a more detailed of the portfolio composition. The pie charts illustrates how it is added up with investments are divided into various geographical areas, assets and industrial sections. The top 20 firms listed summarize how the portfolio is weighted by its most prominent individual holdings. The following chart measures the portfolio’s standards total returns against the selected benchmark. The final section of this analysis also gives a selection of key performance ratios including the risk-adjusted Sharpe and information ratios and a measure of the portfolio’s volatility, or risk. Again these are calculated by reference to the selected benchmarks. Current portfolio vs. desired risk From the given information we have about the current firm’s investments which are comprised of the asset types based on the attitudes towards risk; the targeted asset allocation would be shown. The current portfolio is based on your risk assessment of lowest medium risk and has an overall estimated potential annual growth rate. Target asset allocation We know that a portfolio of investments that resembles one given might be appropriate for the firms because the portfolio is designed to give an opportunity for long term capital growth while also providing limited protection against serious market fluctuations based on inclusion of fixed interest securities. The capital value of the given portfolio may go down, and an investor in each firm is not guaranteed to get back the amount invested in the firms. Risks and expectations The efficient frontier line shows the highest and most probable return one can expect for any risk rate they are enthusiastic to take. This, therefore, assumes the mean growth forecasts for the generic asset types. And anything below the efficient line is said to be an inefficient portfolio given that it could result in the achievement of similar levels of return for less investment risk. On the contrary, it could result in the achievement of more return devoid of increasing the portfolio risks. By upholding the portfolio in line with your target asset allocation, you can keep an efficient mix of risk and return. Recommended actions The aim of these recommended actions is to outline specific areas that should be further considered given to making adjustments to the investment in the 20 firms. By retaining the current asset allocation the firms may experience a greater amount of volatility than would be acceptable to the investors. Its therefore recommended to receive specific advice on moving the firm investments towards the target asset allocation over the suitable timescales and in as efficient manner as possible The due regard will require to be provided to the tax position of any investment alterations. The part of the step to a more suitable overall asset allocation they should consider whether the current individual firms should be retained or be substituted where suitable. We can consider the use of a tax wrapper such as an offshore investment Bond to improve the tax efficiency of the investor’s firms and it will also simplify the administration of the investors. Financial planning assumptions The figures are included in present prices. That is assuming that the price don’t rise and that one dollar now will be able to purchase similar quantity in the future as it can do now. Inflation rate 1.6% Price inflation 2.5% Risk The risk of present portfolios is evaluated only by studying at the risk associated with the current held assets groups. This risk is determined using the expected volatility of the available assets classes.it is significant to know that this measure of risk does not involve an evaluation of product specified risks like encashment outside of maturity dates or security or fund specific and market timing. Maximum likely loss and gain over 12months These values are produced by producing the approximated potential Variances for a 12-month simulation and applying them to the portfolio. Basic methods The portfolios are given by distribution technologies that model assets returns using geometric Brownian motion. This model depends on two parameters; the expected growth rate and the volatility. The current values are shown below: Portfolio Assumed average growth rate Assumed average volatility Portfolio 1 0.6% 1.5% Portfolio 2 1.38% 3.42% Portfolio 3 2.03% 5.58% Portfolio 4 2.78% 9.28% Portfolio 5 3.23% 11.46% Portfolio 6 3.67% 13.97% Portfolio 7 4.06% 16.41% Portfolio 8 4.37% 18.48% Portfolio 9 4.79% 20.86% Portfolio 10 5.18% 24.07% This are approximated based on both historical returns and on an in-house analysis of market data at the stipulated date inclusive of bond and gifts yields. This values can be put nearest form formula to estimate the possible returns at 5-95% level into the future. The above assumptions are focused on their analysis but the stock market related investments can go down as well as rise and the returns are not guaranteed. The portfolio forecast This forecast takes the estimated potential returns and variance for each asset class and grows the portfolio using these estimates. The three possible forecast are shown; The good performance, where the assets have a run of continually goods years over the forecast. Statistically, there is ninety-five percent chance that the assets will grow at less than this rate. An average performance where the assets have a run of continually good years over the return rate. Statistically, this is the 50th percentile of the average expected. A poor performance where the assets have a run of continually poor years. Statistically, there is only five percent chance that the assets will perform worse than this. References Bodie, Z., Kane, A., & Marcus, A. J. (2011). Investments and portfolio management. New York, McGraw-Hill/Irwin. Elton, E. J., & Gruber, M. J. (2011). Investments and portfolio performance. Singapore, World Scientific. http://public.eblib.com/choice/publicfullrecord.aspx?p=731152. Meucci, A. (2005). Risk and asset allocation. Berlin, Springer. http://site.ebrary.com/id/10143821. Tapiero, C. S. (2004). Risk and financial management mathematical and computational methods. Chichester, West Sussex, John Wiley. http://www.books24x7.com/marc.asp?bookid=11292. Read More