Investment Policy Statement
Investor Profile 01
31 May 1988
Investor Profile 02
Miss; W.D.D.M. Rathnasiri
19 Nov 1988
Investor Profile 03
17 Oct 1988
Statement of Objective
Our intention is gaining high return while controlling the risk level of the investment. Though the high return level implied the high tolerance for risk of investors, our objective is to maximize the return while minimizing the overall risk level of the investment to accomplish the maximized wealth. The major reason behind high level tolerance for risk is the return expected through the investment is high. Always we tried to maintain better relationship between the expected return and cost of investment. Except our main objective there are some co-objectives those are, * Mitigation of Risk
To construct efficient and well diversified portfolio three persons are joined together through that we can manage and bear risk among us. On the other hand single marital status, young age and relax feeling of family responsibilities rub up the high tolerance level for risk. * Maintain an appropriate degree of portfolio diversification We will maintain efficient diversification portfolio at all time and it should be matches with the reasonable sector allocation. * Rebalancing of strategic allocation
Assets allocation must matches the portfolio risk tolerance
But as rational investors we cannot rely upon the stable objectives and time to time based on economic conditions objectives may differ. Therefore we have to alter our objectives according to economic condition to obtain highest return while maintaining lower risk.
In the process of investment, the key constraint that we have identified is the sum of capital available for the intention of investment. That is for three members available cash balance is 3mn which restrict the opportunities to invest in real assets or in securities as wish in order to attain satisfactory level of returns. As well as when planning to have an investment decision, have to evaluate so many options such as saving, buying securities from the secondary market, invest in a business, building a house, lending for individual or a company etc. When selecting one or more two options, other options we have to dedicate while bearing opportunity cost. Therefore when evaluating investment decisions opportunity cost also should take into account. But hear since we are basically considering invest in a securities, when investing should comply with the regulations imposed by the Securities and Exchange Commission (SEC). And the investment horizon starts from 8th August to 09th September. But before place our investment we have observed the market behavior from 11th July to 5th August.
The investment policy mainly depends upon the preferences of the investors. When establishing our investment policy statement we have applied individual preferences in order to achieve combined and effective investment goal. Accordingly individual preferences of among three of us have segregated into two categories as Risk preferences and Psychological preferences. As rational investors we have laid our concentration more on optimizing the expected return given level of risk or Minimizing the risk given level of return. Therefore acting as Risk averse investors has significantly affected to decided on effective asset allocation and to adopt a flexible weightings approach (strategic asset allocation) involving the periodic adjustments of the weights for each category on technical analysis. A new allocation therefore may be constructed to capture greater returns in a changing market. When Considering the Psychological...
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