Finance Portfolio Management

Hi, please assist to provide answers with charts for questions which require it.

Answers should be estimated 30words per mark.

You are a junior fund manager in MegaTrends Asset Manager, a boutique fund management

firm. Most of the firm’s clients are high net worth individuals and your firm is well-known

for its expertise in creating very customised and effective portfolios for its clients.

Rachel Chew is one of your firm’s most important clients. Her current portfolio is 100%

invested in Singapore equities. She has recently asked your advice on how she can further

diversify her portfolio by investing in the US equities market.

Assume that the risk-free rate is 1.5%.

Question 1

Discuss which two securities listed on the Singapore Exchange would be good proxies for the

Singapore and US stock markets respectively, and explain why.

(15 marks)

Question 2

Using any resources you deem appropriate (e.g. Bloomberg, Thomson Reuters Eikon),

determine the expected return for the Singapore and US stock markets.

(10 marks) Require Proper referencing in terms of resources.

Question 3

Analyse whether it would be advisable to add US equities to Rachel’s current portfolio by

answering the following:

(a) Extract and download the weekly closing prices of the Straits Times Index and the

S&P 500 for the time period 1st March 2013 to 26th February 2016.

 Require proper referencing and charts.

(b) Calculate the weekly returns for both the STI and S&P 500 indices.

Require proper calculations.

(c) Calculate the annualized standard deviation of the returns of both the STI and S&P

500 indices.

(d) Calculate the correlation of the returns of both the STI and S&P 500 indices.

(20 marks)

Question 4

Based on your answers to questions 2 and 3, discuss whether US equities should be added to

Rachel’s current portfolio.

(25 marks)

Question 5

Using any resources you deem appropriate (e.g. Bloomberg, Thomson Reuters Eikon),

(a) Download and chart three leading economic indicators for the US economy.

 Require proper charts.

(b) Explain why the three economic indicators you have chosen are good predictors of the

US economy.

(c) Analyse the three charts and discuss the economic outlook for the US economy for the

rest of 2016.

(30 marks)