You have just been appointed to the board of a small dedicated emerging market asset manager with
Question:
You have just been appointed to the board of a small dedicated emerging market asset manager with total assets under management (AUMs) of GBP250 million pounds, Tiger Investment Management, which believes emerging markets will continue to outperform developed markets in terms of performance over the next decade. The board is comprised of the three founders, who are all ex-bankers predominantly focused on loan provision to emerging market projects, however they have very little investment management experience. The board also has a non-executive director with business development and fundraising experience in the asset management industry, but no direct portfolio management experience.
The board has asked that given your portfolio management experience that you help brief for the board on the key theories of asset valuation, mean-variance analysis and portfolio optimisation, their critique and how they would apply to Tiger Investment Management.
Your brief will cover:
a)Identifying the key theories of asset valuation, mean-variance analysis and portfolio optimisation and their characteristics.
b)Presenting a structured critique of the key theories providing a rationale for your argument.
c)Linking how the theories apply for the asset management industry at large and specifically for Tiger Investment Management.
d)Conclude to the board given your discussion in part a), b) and c) above how they should leverage these theories to optimize their investment strategy returns and minimize their risks.
Given the technical background of the board, be sure to explain your arguments in a manner easy to comprehend by board members. Your objective by providing this brief is to ensure that the board can implement various takeaways from your report.