Portfolio Management Presentation
Transcript: Even though we generated a low return, the active risk for portfolio was not as low as expected Tracking Error: 5.63% By complying our risk averse attitude, it is optimal that we are minimising active risks whilst getting a stable return throughout the 2 portfolios Return of Portfolio 2 > Return of Portfolio 1 Less weight on Financial sector New sector: Consumer Cyclical New Portfolio is more diversified Description of Portfolio 1 Portfolio 2 More than a half of our funds were in the financial sector Investment Goals & Strategies high score on allocation effect Portfolio return= 2.265 > Benchmark return Aim for low active risks in selecting and allocating each stocks Portfolio 1 Portfolio 2 Chose ANZ at the start Apply technical analysis for big 4 banks in Australia Decided to give up ANZ Wesfarmers - largest retail business in Australia We have not invested in any similar business type before The more diversified the portfolio, the less risk it is Comments on return/risk Reasons of Buying WES Use of Passive Management Strategy Portfolio 2 By comparing IAG and AMP AMP has competitive advantage over IAG Macro economic Factors - Inflation in Australia - RBA Announcement: Interest Rate Decrease AMP focuses more on investing overseas, whilst IAG focuses more on Australian local market AMP’s business is more diversified than IAG - banking/super/advice Return Contribution of Top & Bottom securities Principles we follow Comments on Overweight & Underweight Siyu Wang 3483169 Qiaoxi Li 3365432 Bo Chi 3401350 Negative Allocation effect Negative total effect Reasons of Selling IAG Therefore, we are value investors Total profit in the end – 9 million 6m profit generated after the first session – 20 stocks invested 1m profit after the 1st portfolio – 7 stocks invested Until 18th may, 2m more profit for the 2nd portfolio For the 1st portfolio, IAG and ANZ were decreased. rearranged and created the 2nd portfolio results were quite good in portfolio 2 Decision Factors: (1) For comparison the tracking error (2) Change and comfirm the investment structure (3) Comfirm the companies relationship whit australia government (4) Investment changes in macroeconomic conditions Portfolio 1 Comparison & Contrary of Portfolios Top 5 - BHP, CBA, CSL, TCL, BXB Bottom 5 - NIL Therefore, we chose to give up IAG in our portfolio 2, even though its increasing recently Competitive Advantage Valuation Long-term Therefore, we believe that the 2nd portfolio will generate more profit in the long-term future. Decision on which portfolio to choose Portfolio Management Presentation Investing stocks for long-term benefits Aim for dividend received in future terms Risk averse attitude - Hedging risks by investing both high risk and low risk stocks Actions to improve Sold IAG Bought WES We were not effectively allocating each stock, Therefore - end up with a very low return compared with the benchmark. Thank you! Top 5 - CBA, CSL, IAG Bottom 5 - ANZ, BHP