Development Investment Strategy For Client â€Myassignmenthelp.Com

Question: Discuss About The Development Investment Strategy For Client? Answer: Development and explanation of the recommended investment strategy for the client The whole research philosophy mainly is in line with the needs of the investors, who concentrate in making investments in the Australian Equity market with sufficient measures. Additionally, the investment strategy even holds a relative characteristic like the aggregate returns in order to recognize the total sufficient stocks for the investment. The whole utilization of the technical analysis is mainly undertaken in the total investment strategy, as it assists in recognizing the precise stocks, which are gives out sufficient returns from 2010 to 2017. In this respect, Chapple and Humphrey (2014) has explained that the investors by taking help of the technical analysis are capable of pointing the pattern of the firm, which could assist in making sufficient decisions with respect to investment. On the other hand, Kogan and Papanikolaou (2013), has debated that technical analysis mainly loses their friction when sufficient assessment is not been undertaken by the investor. The philosophy of investment even addresses the US stocks, as one of the suitable investment strategy. The economic investment after the election of Donald Trump has swiftly increased in client in US, which is seen directly with the rise in the stock market. This could virtually aid the investors to gain increased return from the investment in the economy of US. Thus, the portfolio comprises of 20% of US stocks that are enlisted in Australia. Additionally, investments are directly undertaken on large cap stocks, which are listed on the top 100 stocks in ASX. The utilization of the large caps mainly ascertains liquidity in the stock if there are problems that may rise in the future. Bodie, Kane and Marcus (2014) explained the utilization of high volume stocks mainly permits the firms to rapidly sell their investments if the estimation is not undertaken precisely. Conversely, Sadorsky (2014) explained that the development prospects in low cap stocks are precisely higher, as it has an i ncreased return from the investment. Additionally, in the philosophy of investment even includes hedging, which will permit the portfolio to obey the risk from the Australian capital market. The process of hedging permits the investors to decrease the increasing risk, which is displayed by an investment in both the long and short term. This permits the investors to sufficiently decrease the level of risk from the portfolio and gain increased investment return. Therefore, by making use of the technical analysis, the investors could sufficiently recognize the stocks that could create higher returns from the process of investment. Conversely, substitute strategy could be implemented by the investor like the fundamental evaluation, which could be aiding in recognizing the total financial ability of the firm in giving out the precise returns in the coming future.; Representation and the construction of the recommended investment portfolio The Appendix mainly reveals the constructed investment portfolio, which could be utilized by the investor to raise the overall investment returns. The computed portfolio mainly comprises of all the needs that is displayed by the investor and is in line with all the limitations for constructing the portfolio. Additionally, the portfolio is segmented in five parts namely Australian equities, International investment, hedging, US equity fund and cash. The five parts mainly assists in receiving the overall investment returns. Conversely, the utilization of the section of hedging could gradually permit the investments in the portfolio to be secured from the hostile movement of the capital market. Additionally, the first Appendix sufficiently reveals the investments in the Australian equities, which could permit the investor to undertake investments in the market of Australia. The share of the investment value is mainly limited to 10% of the assigned value of the portfolio of $800,000 to the Australian equity. Thus, the Australian equity stocks were selected that was exploited in constructing the portfolio. Conversely, due to the limitations of the allocation of the capital assets on 80,000 value was permitted for its stocks. In this respect, Barberis, Mukherjee and Wang (2016) explained that the distributed portfolio mainly permits the investors to decrease the risk from the investment and raise their return. The second section is even undertaken in a portfolio consists of US equities that is 10% of the total portfolio value. This mainly reveals that the investments in the US equities is undertaken with the total value of $200,000. It is seen that there is no division or limitation that is levied on investing in the US equities. Thus, 40% of the segmented value is mainly given out to the BetShare SP 5000, while 10% of the value is transferred to 'BetShares US Dollar and 50% is transferred to iShares SP 500. The section of the International investment is undertaken in a portfolio, which consists of 20% of the total value of the portfolio that is $400,000. There are limitations on the total investment that could be undertaken on the shares with international connections and that is why the highest return giver is mainly selected. The next portfolio is looking into the hedging measure, which is mainly undertaken due to the needs given out by the investor. Furthermore, 21% of the overall value of the portfolio is given towards the process of hedging which is $424,725. The process of hedging is mainly undertaken on the SPI 200 futures contract, which is mainly utilized to hedge shares of the Australian share market. This could gradually aid in decreasing the risk that may have an impact on the capability of the portfolio to create sufficient returns from the process of investment. The final section of the portfolio comprises of the cash balance, which requires to be maintained by the investor for conducting the smoothly in a precise manner in various sectors. This part is even sub-divided in to AMP Cash Manager Cash Management Account and Margin Movements of the Hedgers. Thus, the investment in AMP Cash Manager Cash Management Account are undertaken where a 1.50% return is fixed. The management of cash is precisely sufficient as the investors requires to understand the pattern and answer the sufficient decisions with respect to investment, which could hedge their market exposure. Justification and explanation for the various components in the investment portfolio The components that is utilized for constructing the portfolio has mainly permitted the investor to create sufficient returns from their investment. With respect to Appendix 2, returns given out from every portfolio stock is recorded, which assists in recognizing the overall returns that is created from the investment. 1.67% return is generally created from the investment time span of 10/07/2017. The quantified period of time mainly assists in recognizing importance of the overall portfolio that has been generated for the investors. The investors being bullish in nature on the US stocks faces the maximum loss on that investment. The other losses on the investment mainly comes from the procedure of hedging, which was undertaken for the Australian shares. Conversely, after the assessment it is gained that the total portfolio value increased from 2,000,000 to 2,002,790.04 in a short time span of one month. This mainly reveals the viability of the portfolio and the actions that were unde rtaken to sufficiently construct the portfolio generation. Thus, the aspects utilized in the construction of the portfolio is significantly justified. Reference List Barberis, N., Mukherjee, A. and Wang, B., 2016. Prospect theory and stock returns: an empirical test.The Review of Financial Studies,29(11), pp.3068-3107. Belo, F., Lin, X. and Bazdresch, S., 2014. Labor hiring, investment, and stock return predictability in the cross section.Journal of Political Economy,122(1), pp.129-177. Bodie, Z., Kane, A. and Marcus, A.J., 2014.Investments, 10e. McGraw-Hill Education. Chapple, L. and Humphrey, J.E., 2014. 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