Risk Management and Investment - Essay Example

From the report, it is evident that the performance of the firm is better than the performance of other investment funds. Additionally, various risks come along the portfolios. Consequently, the recommendations reside on the basis that adding, modifying, and excluding some of the investment funds in the portfolio with improve the performance of portfolio. The investment portfolio is aimed at maximizing income located in the United Kingdom. The investment fund comprises of Greggs Plc., Tate & Lyle, Domino Printing Services, JD Sports Fashion PLC, Bellway PLC, William Hill PLC, Beazley PLC, RPC, Group PLC, Huntsworth Plc, CSR Plc.

, and cash worth 5 million pounds. From the stock 10 of them are securities and only one is 5 million pounds on deposit, which will earn, one per cent since the date inception (Markon 2010). The investment fund is a type of income whose main purpose is to maximize return with very low risk. Therefore, the investment fund needs to invest in securities having stable income like fixed income securities, blue chips, and deposit receipts. Although the growth of the securities is not stable, they are not exposed to various risks.

The report discusses the past performance of the investment fund. Thereafter, the paper analyses the risk of the investment fund, which may hinder the fund from achieving income maximization (Fama 1970). Finally, the paper outline crucial and helpful recommendation for the investment portfolio to make sure that the aim of the fund is satisfied. Before the third section, it is assumed that the date of inception is 1st January 2012 and cut off date is 3rd Februrary. Secondly, the paper ignores the changes effect, inflation rate, trade cost, and commission, which the factors will be nil.

Thereafter, the return of the investment fund will be lower that the return of the investment fund. Consequently, the inter-bank lending rate of one year represents FTSE