FIN 673 UArizona Applied Portfolio Management Investment Strategy Report Paper

Investment Strategy Report paper 

“One of the most important decisions each investor makes is whether to take an active approach or a passive approach to investing” (Jones & Jensen, 2020, p 293). Your client has now asked you to recommend an investment strategy. Prepare a report for the client that reviews the executed portfolios in Stock-Trak and recommends either a passive or active investment strategy.

In your Investment Strategy Report, include the following: 

  • Create a table and list the index mutual funds and/or ETFs you purchased. Include in the table
    • the market value and weight of the position in each fund,
    • the index the fund replicates,
    • the strategy of the fund, and
    • the costs to purchase each fund.
  • Explain your selection of the funds you purchased.
  • Explain the segment of the portfolio invested in funds within the context of a passive management strategy. Identify the following:
    • The theoretical strength of a passive strategy
    • The research-based evidence on passive equity strategies
    • How the selected funds approximate a “Coffeehouse” portfolio
    • The potential weaknesses of this passive strategy
  • Create a table that illustrates the performance of the 20 equities and bonds.
    • Calculate the one-week return for each of your 20 equities and bonds through Thursday of this week.
    • Calculate the annualized return for each security and bond.
  • For the 20 equities, create a table of the following data, as pulled from Stock-Trak:
    • Dividend per share
    • Current dividend yield
    • Current EPS and expected EPS
    • Historical 1-year growth in revenues and earnings
    • P/E and P/B ratios
  • Classify each of your 20 securities as either a value stock or a growth stock. Include your classification on the table.
  • Justify your classification of the securities as either value or growth stocks.
  • For the 20 equities, create a table of the current market values and the weights of each security in this equity portfolio (ignore the mutual funds, ETFs, and bonds when calculating the weights).
  • Categorize the 20-security equity portfolio as either value or growth.
  • Justify your categorization of the portfolio based on your data and the weights of each security in the equity portfolio.
  • Recommend an investment strategy for the client from one of the following:
    • Buy-and-hold strategy, as implemented with the existing 20 equities and bonds
    • Passive strategy, as implemented using the mutual funds and/or ETFs
    • Active equity strategy based on creating a new portfolio of selected stocks targeting a particular strategy (value stocks, growth stocks, a rotational strategy, or sector investing)
  • Support your recommendation with evidence, including the following:
    • The client’s profile (e.g., age, risk tolerance, etc.)
    • Costs to execute each strategy
      • Cite costs incurred in Stock-Trak as well as external information on trading costs.
    • Theory behind each strategy
    • The strengths and weaknesses of each strategy
    • Evidence of performance of portfolios based on these strategies
      • Cite evidence of returns already experienced in Stock-Trak as well as external, research-based evidence.

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