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Risk Management and Investment (Portfolio E) - Essay Example

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Risk Management and Investment (Portfolio E)

The recommendations I made are with the aim to cover the long term and short term goals having analyzed the market and economy trends as at present and the likely trends of the future. With the adoption of these recommendations, the firm is expected to reap maximally from the market (Accounting Education Change Commission, 1993). Introduction Investment management field involves decision making by considering the market in terms of whether to sell or invest. The fact that it involves predictions and analysis makes it a risky venture hence the need for professionals specialized in the area to provide good advice on how better to have good investment. However, it may not really imply that the market trends will turn out as they predicted. It entails three major pillars, analysis of economic factors, industrial factors and the company factors before making the decision on whether or not to invest. Investments are made with knowledge of market expectations and fluctuations (Best Invest, 2013). The current portfolio is facing quite a number of challenges which expose it to risks in the market such that despite the higher levels of investment the return in terms of interest is too low. The fact that it has diversified the investments to a number of sectors is an attempt to avoid the risks. It has invested in oil, travel and leisure, telecommunication, commodity, shares, banks and bonds. The main challenge is the fact that some sectors are giving very little income compared to the investment which is in turn affecting the portfolio negatively therefore the need to change on the same (Bhattacharyya, 2011). History of the Portfolio The portfolio at its inception had a value of ?12,712,642 a value that has steadily depreciated to ?11,784,648 a net loss of ?927,995 a 7.3% loss a negative return which is not good for the portfolio. This could be attributed to a number of issues which include lack of growth and poor investment choices. This hence necessitates the need for analysis for prevent the accelerated rate of depreciation in the values of the Company (Cadez & Guilding, 2008). The investments we placed at inception have all different levels of funds placed in them but to date the highest growing has been TUI Travel which was at its inception having an investment of value of ?196.960 which bought us 80,000 shares. It has since grown by a margin of 32.25% increasing its value to ?260,480, a one third increase. The positive growth reported in the investment has earned dividends worth ?18,000these dividends have significantly been utilized by being re invested in other more business ventures the Company is endeavoring in (Clinton & Van, 2006). The down fall is that even though this is our most promising investment at cut of date in the portfolio it is weighted unevenly and different investments hold a different weighting depending on how much money was invested in them. The weighting for TUI travel was only 1.55% at inception and has now increased to 2.00% which shows growth in weighting but shows that it only accounts for a minute section of the portfolio. Showing that the substantial growth of 33.25% is shadowed by the fraction of weighting it holds. The volatility has been an issue to as over period of the investment the share price valuation has dropped to maximum of -9.00% and the highest gain being around 6% but since May 2012 the share price has been steadily rising this ...Show more

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Risk Management and Investment (Portfolio E) Name: Instructor: Course: Date: Executive Summary This study’s aim was to go through the portfolio E, analyze it and identify risks after which I was to come up with possible recommendations to contain the risks and cushion the company in its aim to meet maximum income at the minimal cost possible…
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Risk Management and Investment (Portfolio E) essay example
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