FIN3IPM Portfolio Management
ASSIGNMENT – INVESTMENT PORTFOLIO CONSTRUCTION
You currently work for an individual client adviser for Bell Potter Securities, a leading Australian
stockbroking and investment advisory firm, which provides investment advice, share trading and wealth
management services primarily to high net-worth individual and institutional clients. These clients pay
full-service advisory and commission fees to your firm in return for the provision of initial investment
planning and evaluation services, ongoing investment and related advice and the development and
management of investment strategies and portfolios on their behalf.
You have just been assigned a new client to represent. Due to the ongoing adverse impacts of the
COVID-19 pandemic on local and international tourism, they have recently sold a network of franchised
travel agency businesses and are looking to invest some of the sale proceeds in an investment portfolio
focusing on Australian and international share markets. The client has allocated A$8.5 million for the
creation of an investment portfolio, and they have approached your firm for investment advice and to
act as their stockbroker and portfolio manager in developing and managing this investment portfolio in
the future. The client has provided the following brief and guidelines associated with their desired
investment strategy and portfolio requirements:
• Risk profile: Relatively High – willing for funds to be invested in individual equity securities, listed
investment securities and exchange traded products (ETPs), cash and digital currency; open to
investment exposure in both Australian and international financial markets.
• Return focus: The client would prefer the investment strategy and associated portfolio to be
focused on capital growth but is open to future reinvestment of dividend or other income
distributions.
• Investment horizon: Minimum 10-year investment (holding) period, but with active management
over the investment period.
• Country focus: At least 50% of the available funds are to be invested in constituent companies
included in the S&P/ASX 200 index and/or securities providing exposure to the Australian Securities
Exchange and at least 20% of the available funds are to be invested in companies included in the
US-based Nasdaq 100 index and/or in securities providing exposure to the Nasdaq Stock Exchange.
• Share component and diversification: At least 65% of the total portfolio funds are to be invested in
individual company equity (share) securities. To ensure a prudent level of diversification, no more
than 10% of the total available funds are to be invested in any one individual company or security.
• Industry focus: Based on their business background, they would like a minimum of 15% of the total
available funds to be invested in companies or securities providing exposure to the travel and
tourism industry.
• Indirect equity investment: Some portfolio investment in Australian or international share markets
is allowable through holdings in index funds or Exchange Traded Funds (ETFs), but this investment
component is to be limited to a maximum of 30% of the total available funds. (A list and price
history of preferred index funds and ETF investment options is provided in the spreadsheet
document forwarded by the client).
• Short selling: Short selling of direct equity and ETF securities is permissible if it is consistent with
the proposed investment strategy, although sufficient cash and/or digital currency reserves are
required to be held to meet position closing out (re-purchasing) requirements.
• Cash investment: A maximum of 20% of the total portfolio funds can be invested in cash, which
will be invested at the 180-day Bank Bill Swap Rate (BBSW) of 0.795% per annum as at 11/4/22.
The client has an existing digital currency wallet and is also willing for any cash component of the
portfolio to alternatively be held in Bitcoin. One Bitcoin is worth A$56,304.37 on 11/4/22.
2
Required:
This case study requires the preparation of an investment portfolio proposal document to be
provided to the client, which should include the following information:
• A brief and informative summary of the current investment environment, both in Australia and
internationally and linking with the client’s requirements, and identification of any key economic
or financial indicators or events impacting on the near-term investment environment.
• Presentation of the underlying investment philosophy and portfolio strategy proposed for the
client, including consistency of alignment with the indicated requirements of the client.
• Explanation and justification for this strategy, individually or relative to alternatives, should be
provided.
• A description, in table or similar format, of the recommended portfolio components, indicating the
selected assets/securities and the magnitudes of investment in each.
• If required, a brief explanation of how each of the recommended investment components aligns
with the overall investment strategy.
• Assume this portfolio construction is being done on Monday 11 April 2022.
• You should use the spreadsheet file provided with the case study information to complete the
investment strategy development and portfolio construction requirements.
This is an individual case study task and contributes 30% to the overall assessment for the subject. The
investment strategy and portfolio proposal document is due to be submitted to the client by 11.55pm
on Sunday 22 May 2022 via the FIN3IPM subject LMS site. The suggested word limit, excluding any
figures, calculations and the portfolio presentation, is 1,000-1,500 words. You will not be explicitly
penalised for exceeding this word limit, but if an investment proposal is longer than it needs to be – if it
is unnecessarily wordy and forces the client to spend more time reading it than they should, this will
detract from the overall presentation and hence the overall mark. Good business writing needs to be
both concise and informative.
