Beta Case Study

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Investment Management

BMC Case Study

Student Name: Junwei Wang
Student ID: 11516655

Class Time: 6 p.m. – 9 p.m. Tuesday
Lecturer: Wing Bui

Table of content
Q 1. 1
Q 2. 1
Q 3. 2
Q 4. 2
Q 5. 3

Beta Management Company
I. Case Background
Beta Management Company was founded in 1988 by Ms. Wolfe. Beta Management Company is a small investment management company based in a Boston suburb. Beta Management Company was successful in 1989 and 1990. This success had brought in enough new money to double the size of the company. However, Ms. Wolfe had lost some potential new clients who had thought it unusual that Beta Management used only an index mutual fund and picked none of its own stocks. Sarah Wolfe was considering Beta’s new goal and directions for coming year.

II. A. Ms. Wolfe decided to follow “ index” to adjust equity market exposure. This is a good strategy due to that at the beginning of the foundation of the company, the size of her account was small and there were no much money for her to take a risk. The strategy she followed was the lowest risky way. Ms. Wolfe kept a majority of Beta’s funds in no-load, low-expense index funds, adjusting the level of market exposure between 50% and 99% of Beta’s funds in an attempt to “time the market”.

B. Ms. Wolfe now has decided to increase her equity exposure to 80% with the purchase of one of the California R.E.I.T. and Brown Group, Inc. While Ms. Wolfe wanted to extend her business, she found that some potential clients thought it unusual that Beta Management used only an index mutual fund and picked none of its own stocks, Ms. Wolfe was engaging her new strategy. Unlike before, Beta increase the equity exposure from 50% to 80%. Beta used to have...
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