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Advanced Portfolio Management L7

Coursework Individual Assignment 2020/2021

You are an Investment manager for the Private Banking team of Rich & Wealthy Plc, a bank based in London. Whilst this bank is primarily a retail institution, you represent the team which deals specifically with “high net worth” clients, offering a bespoke service to clients a minimum income of £150,000pa and investment assets in excess of £250,000 market value.

This is a competitive market and the type of clients that you represent will expect the highest possible service standards and, if disappointed, will be quick to take their business elsewhere.

You have recently been introduced to Mr William Sharp, who has become dissatisfied with his current financial advisors. Mr Sharp has told you that he believes his former advisors have disregarded his wishes and have failed to achieve his aims and objectives with his current investment portfolio.

Mr Sharp has an existing portfolio of securities but has also recently inherited a lump sum of money from his late father’s estate. He has inherited a sum of £250,000, which is currently on deposit in his bank account earning a poor return of 0.15% pa, with instant and penalty free access available. He is awaiting your professional opinion; he has asked you to review his existing investments and make recommendations regarding the performance of his portfolio, if it may be improved and how he should invest his inheritance.

During your first meeting with Mr Sharp, you collected a substantial amount of personal and financial information which you hold on file; including the following key information:

Mr Sharp is 45 years old, single with no financial dependents and owns his own house in London which is mortgage free. He has no outstanding financial debt at this time.

He is employed as a lawyer in the City of London, with an annual salary of £190,000 and is fortunate to have a substantial “rainy-day” fund in savings split between four other retail banks. These funds are to remain as liquid savings and he does not require any income to be generated from his investments at this time, due to his current tax status.

His aims and objectives at this time are to achieve long-term sustainable capital growth in excess of the return on the FTSE All-Share index and his agreed investment time horizon is ten to fifteen years.

You have accurately assessed Mr Sharp’s attitude to investment risk; which is agreed to be a little more aggressive than balanced and he has confirmed that whilst he is prepared to accept some reasonable investment risk in the pursuit of long-term capital growth, he does not wish to risk major capital loss.

Mr Sharp is prepared to invest overseas if the risk is not too great; however, he is not prepared to expose himself to derivatives, structured products, commodities or other alternative investment classes which carry excessive risk.

Details of Mr Sharp’s existing investment portfolio.

Holding
Description
Index
Market Price
Value

ORDINARY SHARES

1,300
Lloyds Bank (LLOY)
FTSE100
79
1,027

700
Royal Bank of Scotland (RBS)
FTSE100
214
1,498

1000
HSBC (HSBA)
FTSE100
621
6,210

1,200
Barclays (BARC)
FTSE100
240
2,880

500
Imperial Tobacco (IMB)
FTSE100
3610
18,050

400
BAT (BATS)
FTSE100
3223
12,892

1,500
Tesco (TSCO)
FTSE100
320
4,800

1,200
Sainsburys (SBRY)
FTSE100
350
4,200

1,050
Marks & Spencer (MKS)
FTSE100
362
3,801

400
Schroders (SDR)
FTSE100
3080
12,320

600
RSA Insurance (RSA)
FTSE100
578
3,468

700
J P Morgan Chase (JPM)
NYSE
85.50
59,850

800
Wal-Mart Stores (WMT)
NYSE
73.90
59,120

INVESTMENT TRUST

1,100
Fidelity China Special Situations IT (FCSS)
FTSE350
165
1,815

Nominal
BONDS

£12,500
Barclays bank Plc 5.75% 2026 XS0134886067

112
14,000

£14,500
Severn Trent Utilities 6.25% 2029 XS0097777253

121
17,545

£20,000
1.3/4% Treasury Gilt 2022

102
20,400

PLUS £250,000 CASH HELD IN AN INSTANT ACCESS CURRENT ACCOUNT

Assignment requirements.

You are required to complete the following actions:

Critically discuss the performance of the existing investment portfolio and make an assessment of its suitability to meet the client’s stated aims and objectives.

Make recommendations for changes to the existing portfolio in order to create a portfolio which has the potential to meet the client’s needs. Your recommendations should include the additional cash sum that Mr Sharp has inherited.

During your discussions, Mr Sharp has informed you that he will retire when he is around 60 years old and that he is a member of his employer’s final salary pension scheme. You are aware that when he begins preparations for retirement, his aims and objectives for his investment portfolio may change; it is very likely that he may wish to produce a blend of modest capital growth together with a sustainable income stream to augment his pension income in retirement.

If this proves to be true; what changes to Mr Sharp’s investment portfolio would be likely to be appropriate?

You are free to make any reasonable and justifiable assumptions and it is expected that your answer will address economic circumstances and inflation.

FURTHER INFORMATION:

Prices of the securities within the portfolio.

Update the existing portfolio using prices and values on a date of your choosing and use the prices of securities on the same date for any selling / buying as part of your recommendations.

Bibliography

You are reminded that you must include a full reference section at the end of the assignment and also include appropriate acknowledgements in the text of the assignment. You should follow normal academic conventions e.g. the APA system.

Word Count

Your assignment should be no longer than 2,500 words and presented in a report format. The word count (excluding bibliography and appendices) must be stated on the front sheet of the assignment. If the word count is exceeded the rules shown below will apply.

Your assignment specifications set a word limit of 2,500 words, excluding appendices. Where the words exceed this by more than 10%, work will be penalised for exceeding the word limit.

Marking Guidelines

Please refer to the attached mark grid for guidance on the structure and mark weighting for the various learning outcomes. Marks will be available via grade book on the Module Blackboard site and marks, together with individual feedback will be emailed to all students.

Submission

Students must submit their assignment via the submission portal AND through the Turnitin System, on or before the deadline stated. Failure to comply will result in your assignment being classed as late or as a non- submission.

Late submission of course work will be dealt with under standard University regulations which are available on the Registry part of the Student Intranet.

Unacceptable / Poor academic practices and Submission Regulations

The normal University rules apply. If you have any doubts regarding these rules please refer to the support and information section on Blackboard, SHIP, the Module Leader or your Course Leader. Any Turnitin score over 20% will be looked at very closely and plagiarism will be investigated. However please note that scores below this benchmark will also be subject to close analysis given Turnitin’s limitations. It is therefore imperative that you have correctly referenced all material.

Feedback

Feedback will be given within 3 weeks of the deadline via grade centre and email

ADVANCED PORTFOLIO MANAGEMENT L7 – COURSEWORK ASSESSMENT CRITERIA 2021

Fail
Marginal fail
Pass
Merit
Distinction

Below 40%
40 – 49%
50 – 59%
60 – 69%
70% and above
Maximum Mark

Outcome a) Analysis of the performance & suitability of the existing portfolio
Little attempt to analyse the performance & suitability of the existing portfolio
Some attempt at analysis of the performance & suitability of the existing portfolio.
Reasonable attempt at analysis of the performance & suitability of the existing portfolio
Good attempt at analysis of the performance & suitability of the existing portfolio
An in depth analysis of the of the performance & suitability of the existing portfolio
30

Outcome b) Draw up a new portfolio to meet the requirements of the clients giving clear reasons for the recommendations.
Little or no attempt at a balanced portfolio. No reasons for choice of investments.
An attempt at a balanced portfolio. Reasons for choice of investments weak.
Reasonable attempt at a balanced portfolio. Incomplete reasons for choice of investments
Good attempt at a balanced portfolio. Good reasons for choice of investments.
Work shows a very good attempt at a balanced portfolio. Reasons for choice of investments strongly argued and backed up.

40

Outcome c) Consideration of appropriate changes required to investment portfolio in the future.
Little or no attempt at this topic
A basic description of appropriate key points
Reasonable description of appropriate key points and their implications
Good description of appropriate key points and their implications
A very clear understanding and description of appropriate key points and their implications
10

Usage and critique of relevant literature, accuracy and quality of referencing in the text and bibliography.

Little or no critical evaluation of literature. Referencing and bibliography very weak or none existent
Some usage of relevant literature, but weak on the critical evaluation. Referencing poor and inaccurate.
Reasonable use of relevant literature, showing reading around the subject, but some weaknesses in evaluation. Referencing good.
Good review of available literature with good evidence of reading around the subject. Critical evaluation of literature good. Referencing and bibliography very good.
Work shows strong evidence of depth of reading and in depth critical analysis. Referencing and bibliography excellent.

10

Written communication and cogency of arguments

Poorly written, hard to follow, spelling and grammatical errors.
Able to follow points made, some spelling and grammatical errors.
Reader friendly and few spelling and grammatical errors.
Very reader friendly, few or no spelling and grammatical errors.
Very reader friendly, few or no spelling and grammatical errors, imaginative / innovative approach to communication ,
10

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