Portfolio Statement of Objectives
We have opted a balanced investment strategy for our portfolio. This decision is based on the fact that, our investors will be comprised of individuals who apprehensive/concerned about taking on too much risk but at the same do not want to invest in low returning assets. Therefore in order to spread risk and create a well-balanced diversified investment mix, our investment strategy will consist of the following allocation/asset mix: 50% Equities (35% U.S. Stock and 15% Foreign Stock), 40% Bonds, 5% Derivatives, and 5% short-term investments. It should be noted that this particular portfolio period will be for approximately six weeks. We believe that the above portfolio mix will yield strong returns and growth and shield our investors from turbulent losses. However we would like to note that this portfolio mix is not risk-free and this particular investment strategy has been known to be “riskier than a capital-preservation strategy but less riskier than a [traditional] growth strategy.” (Balanced Investment Strategy). However much of the risk of the portfolio has been combated with the diversified asset allocation, but investors should still consider all risks and benefits prior to investing the above portfolio. It is noted that we had stock portfolio analysis technology and yahoofinance.com to track the performance of the stocks, which admittedly is aligned with more of a passive investment strategy.
As noted above, investors should be conscientious of all the potential risks that are experienced with investing in the market; no strategy should be treated as full proof and by virtue there is a potential to be exposed to losses. With that being said, there are certain things a portfolio manager can do to absorb and minimize the risk of exposure to extreme, one such thing is diversification, which was mentioned above. So what is diversification exactly? Diversification can be defined as “a risk management technique that mixes a...