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EC381 Assignment
Rob Hayward and Babak Sodagar
October 2, 2018
Introduction
You will be required to run a portfolio through the first quarter of 2019. The portfolio will have three assets: US equities, US bonds, cash, Bitcoin and gold. You will write a report analysing the results of your fund performance. The hand in date for the report is 26 April 2019.
Your assets
The equity and bond performance will be determined by Exchange Traded Funds (ETF). These are passive investment vehicles that hold a range of assets.
• The equity holdings will be based on the SPY ETF. This fund will follow the S&P 500 index. You can find out more about the fund on Yahoo Finance, Morning Starr and other sites. Use the ticker SPY to get information.
• The bond holdings will be based on the TLT ETF. This fund will follow the ICE 20 year plus government bond index. Again, you can find out about the fund using the ticket TLT.
• The gold holdings will be based on the GLD ETF. This is a gold share tracker. The ticker is GDL.
• The Bitcoin value will be based on the US dollar value of Bitcoin. I will use the BTC ticker from the CME.
Adjusting the portfolio
There are a number of rules that are applied to make this exercise work:
• You begin with $1 million in cash.
Rob Hayward and Babak Sodagar
• You can only make changes to the portfolio at the weekend. This is to make it easier for me to track what is going on and to prevent you being distracted from your other classes.
• You will trade at Friday’s closing price.
• If you make a mistake and try to spend more money than you have, the trade will be cancelled and you will be fined 10% of your original fund (i.e. $100,000). Mistakes are expensive.
• You will be given a confirmation of your trades, your portfolio holdings and a valuation at the beginning of each week.
Portfolio management and you portfolio
You will have to write a report about your portfolio performance so keep the following in mind:
• It would be good to keep a record of what you did and why you did it so that you can refer to it in April.
• Try to use what you know about economics and finance to develop an investment strategy.
• The performance will depend on real world events. You will be provided with an overview of the upcoming week each Friday. The most important things that are scheduled are likely to be economics data, meetings of the central bank and political events.
The report
The report will be one 1250 words. It should be professional document that will explain your strategy and performance. The following marking criteria will be applied.
Criteria Weight Manage the account effective and professionally 10% Manipulate data, calculate performance statistics 20% Present performance (graphs) 20% Explanation of the strategy 20% Critical assessment of performance 20% Presentation 10%
EC381 Assignment 2
