• FIN330 Alternative Assets - Final Assessment Background: Alternative assets can help diversify and complement traditional equity portfolios by seeking returns that are independent from equity market and reducing portfolio's overall sensitivity to traditional markets. Assuming that you have held a portfolio with combination of S&P/ASX200 index Exchange Traded Fund (ETF) and at least one alternative investment asset class since January 2022, and your goal of adding the alternative investment asset class to your equity portfolio is to further improve diversification of your portfolio. The portfolio evaluation is due by June 2025, so it is about the time to begin the evaluation on performance of your portfolio. Preliminary Information and requirements: You are ask to make a report on a hypothetical portfolio which you had managed in from January 2022 to December 2024. As this report is to be completed in hindsight, final evaluation results will not be critical marking criterion. Marking will centre on your abilities to apply the knowledge you have learned from FIN330 and other introductory finance subjects to explain your portfolio construction decisions that were made prior to January 2022, and evaluate annual performance of the hypothetical portfolio from 2022 to 2024. For simplicity, you can use an annual interest rate of 4.5% (risk-free rate) over the given years for all relevant calculations if it is needed for the analysis. Historical stock market data and alternative investment data must be collected from reliable sources, such as DatAnalysis, Yahoo Finance, Refinitiv and/or other finance databases. Section Marks Summary Abstract /5 A brief overview of the report Introduction /25 Set a clear portfolio goal. Explain how to achieve the portfolio goal from a theoretical perspective and whether the goal is achieved or not in 2022, 2023 and 2024. Consider and explain possible alternative asset classes which can potentially help you to achieve your diversification goal. Discuss the advantages and disadvantages of the alternative asset classes and further discuss which alternative asset class/classes is/are appropriate to help you to achieve the goal. Hint: Is the data available for the alternative asset class? Research /30 Analyse mean variance (or standard deviation) trade-offs for S&P/ASX200 index and the alternative investment asset/assets using the data available prior to January 2022. Explain your findings with an emphasis on risk-return trade-off. Calculate correlation coefficient for S&P/ASX200 index and the alternative investment asset/assets. Explain your findings. Construct your new portfolio for the start date (Jan 2022) based on your analysis results, and explain your asset allocation decision. Portfolio management and performance evaluation /30 Evaluate annual performance of your portfolio over the 3 years holding period. Discuss the implications of your portfolio performance and diversification evaluation results. Hint: Did your portfolio achieve the portfolio goal in 2022, 2023 and 2024? Are the results consistent or different compared to your expectations? Suggest a hedging strategy for your portfolio. Hint: Use an option contract to protect value of your portfolio. Data is not required for this task, but sufficient discussions around how the hedging strategy works is needed. Conclusion /5 Summarise all major sections within the document and conclude. References /5 Harvard style referencing Websites and databases where the data was sourced for stocks, companies, sectors, economic indicators etc TOTAL /100