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Task 1
Benchmark for the investment portfolio
In order to measure the performance of individual funds, the benchmark should be chosen to critical whether the portfolio has met or not the investor’s goal and objectives. Refer to the substance of the five funds; the benchmarks are selected shown as below and reasons why choose these benchmarks are shown following:
Colonial First State Cash Management Trust
The benchmark of CFS is RBA 90 days BAB rate, because it is sensitive to interest rate change and CFS aims to provide a regular income stream from investments in money market securities with a very low risk of capital loss which is high related to interest rate.
UBS Australian Bond fund
19551101769745Chart 1.1
0Chart 1.1
The largest composition of UBS (Chart1.1) is bonds which includes semi-Government Bonds, Government Related Bonds and Corporate Bonds. Refer to the substance of S&P/ASX Australian Fixed Interest Index Series which is designed to measure the performance of the Australian bond market.
SPDR ASX 200 and Arrowstreet Global Equity Fund
The SPDR ASX 200 and Arrowstreet Global Equity Fund are designed to seek exceed return of the S&P/ASX 200 Index and the MSCI All Country World ex Australia Index respectively. So they are exposed to Australian equity and international equity market excludes Australia respectively.
Vanguard Australian property securities index fund
It includes securities across the retail, office, industrial, tourism, and infrastructure sectors. A-REITs main focused on property sector in Australia.
Compare the investment portfolio with its benchmark
19392903484245Table 1.1
0Table 1.1
We need to collect previous five years data need to run the regressions of excess return by using CAPM model:
Ri-Rf=α+ β*Rm-Rf+εHowever, Vanguard only can be found latest three years historical data. For the sake of keeping consistency, the data all use recent three years’ information.
Passive Fund Performance
As the
Benchmark for the investment portfolio
In order to measure the performance of individual funds, the benchmark should be chosen to critical whether the portfolio has met or not the investor’s goal and objectives. Refer to the substance of the five funds; the benchmarks are selected shown as below and reasons why choose these benchmarks are shown following:
Colonial First State Cash Management Trust
The benchmark of CFS is RBA 90 days BAB rate, because it is sensitive to interest rate change and CFS aims to provide a regular income stream from investments in money market securities with a very low risk of capital loss which is high related to interest rate.
UBS Australian Bond fund
19551101769745Chart 1.1
0Chart 1.1
The largest composition of UBS (Chart1.1) is bonds which includes semi-Government Bonds, Government Related Bonds and Corporate Bonds. Refer to the substance of S&P/ASX Australian Fixed Interest Index Series which is designed to measure the performance of the Australian bond market.
SPDR ASX 200 and Arrowstreet Global Equity Fund
The SPDR ASX 200 and Arrowstreet Global Equity Fund are designed to seek exceed return of the S&P/ASX 200 Index and the MSCI All Country World ex Australia Index respectively. So they are exposed to Australian equity and international equity market excludes Australia respectively.
Vanguard Australian property securities index fund
It includes securities across the retail, office, industrial, tourism, and infrastructure sectors. A-REITs main focused on property sector in Australia.
Compare the investment portfolio with its benchmark
19392903484245Table 1.1
0Table 1.1
We need to collect previous five years data need to run the regressions of excess return by using CAPM model:
Ri-Rf=α+ β*Rm-Rf+εHowever, Vanguard only can be found latest three years historical data. For the sake of keeping consistency, the data all use recent three years’ information.
Passive Fund Performance
As the