Investment Strategy and Portfolio Management for Morris - Case Study Example

Download file to see previous pages In the modern world, there are a number of avenues that promotes itself as an investment avenue and promises to generate varying returns for investors. Means of investment have grown larger to include new avenues like gold, real estate, commercial papers, commercial deposits, mutual funds, etc. The advantage of investing in a pooled investment vehicle is the size of investment. A pooled fund has a larger corpus than an individual investment and hence can utilize a broader opportunity of investment. Any investment fund needs to have its objective, based on which it decides the avenues of investing. Another important determinant of the fund is the risk appetite of the investors. A fund must have a pre-decided risk-taking ability so that the asset allocation can be decided. There are certainly other factors that need to be taken into consideration such as the required liquidity, the maturity period and the tax considerations (Davis & Steil, 2004, p.52-55).

The charitable fund created by a group of investors to generate wealth in order to pay for the educational expense of the children of the investors has a lock-in period of 5 years. The fund, in its very essence, appears to be a moderate risk-bearing fund in the sense that it needs to ensure the availability of funds for the educational purpose of the investor’s children. Currently, the members of the investment committee are apprehensive of withdrawals of the corpus exceeding the inflow of funds by a margin of 3% in the next five years. For the sake of analysis, it needs to be assumed that the cost of higher education will be rising and hence the need for funds will keep on rising as well. The main purpose of the fund should be to ascertain that the difference between fund inflow and outflow does not get misbalanced in a way that it jeopardizes the very existence of the fund.
The investment environment post-financial crisis has remained all across the world and the UK has been no exception to this. ...Download file to see next pages Read More