Investment Strategy and Portfolio Management
Investment Strategy and Portfolio Management - Case of study: Kaplan Capital
Introduction
For organisations operating in unpredictable and competitive markets, it becomes a challenge for fund managers to create an optimal investment portfolio for their companies and their clients. Fund managers are presented with various prospects in emerging markets, equities, real estate, corporate bonds, government bonds, hedge funds, financial derivatives, and other alternative investments options. With such a diverse investment market, it becomes increasingly complicated for fund managers and other investors to shape, manage and monitor investment portfolios. This report presents a discussion on the future strategic asset allocations which Kaplan should employ in making its investments in order to ensure high levels of profitability in the company.
Harry M. Markowitz, a University of Chicago economist, developed the portfolio theory in 1927 (Markowitz 1952). Portfolio theory is an investment technique that enables investors to make suitable estimates of both the anticipated risks and returns, as evaluated statistically, for their investment portfolios. Harry identified how investors can combine different investment assets into an efficiently diversified portfolio. He argued that combining investment assets with different price movements – negatively correlated assets; would reduce the expected risk of a portfolio and improve the expected rate of return of from the portfolio. He described how to best design a diversified portfolio and confirmed that such a portfolio was expected to perform well.
Analysis of the Current Issues in the Investment Environment
The recent disruptions in financial and money markets have triggered fear and anxiety among many investors. Globally, share markets have been falling sharply, considerably affecting portfolios and confidence of investors internationally. Therefore, before we settle on any investment strategy there are a
Introduction
For organisations operating in unpredictable and competitive markets, it becomes a challenge for fund managers to create an optimal investment portfolio for their companies and their clients. Fund managers are presented with various prospects in emerging markets, equities, real estate, corporate bonds, government bonds, hedge funds, financial derivatives, and other alternative investments options. With such a diverse investment market, it becomes increasingly complicated for fund managers and other investors to shape, manage and monitor investment portfolios. This report presents a discussion on the future strategic asset allocations which Kaplan should employ in making its investments in order to ensure high levels of profitability in the company.
Harry M. Markowitz, a University of Chicago economist, developed the portfolio theory in 1927 (Markowitz 1952). Portfolio theory is an investment technique that enables investors to make suitable estimates of both the anticipated risks and returns, as evaluated statistically, for their investment portfolios. Harry identified how investors can combine different investment assets into an efficiently diversified portfolio. He argued that combining investment assets with different price movements – negatively correlated assets; would reduce the expected risk of a portfolio and improve the expected rate of return of from the portfolio. He described how to best design a diversified portfolio and confirmed that such a portfolio was expected to perform well.
Analysis of the Current Issues in the Investment Environment
The recent disruptions in financial and money markets have triggered fear and anxiety among many investors. Globally, share markets have been falling sharply, considerably affecting portfolios and confidence of investors internationally. Therefore, before we settle on any investment strategy there are a
References: Mark Grinblatt, STRW 1995, 'Momentum Investment Strategies, Portfolio Performance,and Herding: A Study of Mutual Fund Behavior ', The American Economic Review, vol 85, no. 5, pp. 1088-1105. | | | |(Source: Gerlowski, Fung & | | | | | |Ford, 2011) | |