Bravo Investment is a large investment company incorporated in Singapore. It services many clients in Singapore...

  

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Bravo Investment is a large investment company incorporated in Singapore. It services many clients in Singapore and the region. Of the many funds under its umbrella, a fund called the Bravo Active Fund uses the core-satellite concept in its portfolio construction. Currently, the Bravo Active Fund has USD500m under management. To implement the core- satellite approach, the fund must first determine the asset allocation, allocate core and satellite proportions and finally select the active funds. The fund investment objective is stated as capital preservation and aims to achieve 7% return per annum in USD with portfolio volatility of about 10% per annum. The investment horizon of the fund is longer term of three to five years. At the core, the assets classes that the fund can invest in include Global Stocks, Global Bonds and Real Estate. Investments in the core are expected to be competitively priced in fairly efficient markets except for the real estate portfolio that was included based on interest in that asset class from many clients. The satellite portfolio includes investments in markets where managers can add value where they can pick up bargains. Bravo regularly assesses managers based on their performance over a period of time. You are one of the fund managers who will compete to obtain an active mandate from Bravo. Your success depends on the proposed strategy to manage a satellite portfolio for a similar three to five-year horizon. Bravo Active Fund needs you to examine its investment objectives and constraints. Please also construct a one-page Investment Policy Statement for Bravo. (a) (20 marks) (b) Appraise the characteristics of cash, equity, bonds and real estate and recommend to Bravo the weights in each asset class in the table below. Design the composition of your core allocation and explain your choices. Core Asset Allocations Asset Class Target Equity Bonds Real estate Cash Total 100% (40 marks) In addition, Bravo's CIO wants to know how, in particular, you would invest the satellite portion globally and what strategies and themes for the satellite portion that you would employ. (c) Appraise the choice of one (1) satellite asset class and assess one (1) approach from your chosen satellite asset class for active management. (20 marks) Bravo Investment is planning to start a division to service individual clients. Discuss adjustments that it would need to make in assessing the risk of clients to better service these clients. (d) (20 marke) Bravo Investment is a large investment company incorporated in Singapore. It services many clients in Singapore and the region. Of the many funds under its umbrella, a fund called the Bravo Active Fund uses the core-satellite concept in its portfolio construction. Currently, the Bravo Active Fund has USD500m under management. To implement the core- satellite approach, the fund must first determine the asset allocation, allocate core and satellite proportions and finally select the active funds. The fund investment objective is stated as capital preservation and aims to achieve 7% return per annum in USD with portfolio volatility of about 10% per annum. The investment horizon of the fund is longer term of three to five years. At the core, the assets classes that the fund can invest in include Global Stocks, Global Bonds and Real Estate. Investments in the core are expected to be competitively priced in fairly efficient markets except for the real estate portfolio that was included based on interest in that asset class from many clients. The satellite portfolio includes investments in markets where managers can add value where they can pick up bargains. Bravo regularly assesses managers based on their performance over a period of time. You are one of the fund managers who will compete to obtain an active mandate from Bravo. Your success depends on the proposed strategy to manage a satellite portfolio for a similar three to five-year horizon. Bravo Active Fund needs you to examine its investment objectives and constraints. Please also construct a one-page Investment Policy Statement for Bravo. (a) (20 marks) (b) Appraise the characteristics of cash, equity, bonds and real estate and recommend to Bravo the weights in each asset class in the table below. Design the composition of your core allocation and explain your choices. Core Asset Allocations Asset Class Target Equity Bonds Real estate Cash Total 100% (40 marks) In addition, Bravo's CIO wants to know how, in particular, you would invest the satellite portion globally and what strategies and themes for the satellite portion that you would employ. (c) Appraise the choice of one (1) satellite asset class and assess one (1) approach from your chosen satellite asset class for active management. (20 marks) Bravo Investment is planning to start a division to service individual clients. Discuss adjustments that it would need to make in assessing the risk of clients to better service these clients. (d) (20 marke)