A) DESCRIPTION OF FUND



A) DESCRIPTION OF FUND

Our portfolio entails of an aggressive growth fund in order to maximize our profits. There is a strong capital appreciation because of the time horizon and the risks involved. The key in reducing the unsystematic risk is by creating a diversified portfolio. Therefore, we created a diversified portfolio that included various sectors such as transportation, technology, and necessities. As a group of young money hungry investors, we have been seeking to increase our investments immensely by taking many risks within certain limits. We attempted to purchase various investments in order to obtain the highest intrinsic value for our portfolio.

B) INVESTMENT OBJECTIVES

1. Return Requirement

Based on the Consumer Price Index over the previous one-year period, there has been 2% in excess of inflation. The total return of our portfolio which continued to show strong growth within the short time horizon included dividends, interest, capital appreciation, and overall less transaction costs as well as management fees. The funds annual management fees are approximately 1% of the average net asset value for the entire year. Where as current inflation, as measured by the US Consumer Price Index, is approximately 2%.

2. Risk Tolerance

Considering our short time horizon of only 2 months, it was apparent in order to increase our investments immensely we need to be aggressive and take certain risks. Even though the stock market appeared to be at a volatile stage because of inflation, interest rates, and War, we still decided to pursue various aggressive strategies. As young investors we all had a high level of risk tolerance, however by creating a diversified portfolio we minimized our risks and reduced the level of volatility that could have impacted our portfolio negatively. Due to the immense liquidity needs, our fund required an above average amount of cash and short term investments. Overall, our level of risk was between medium to high level.

LESSONS LEARNED

As ranking in the top 4 groups, we were able to play the market as a true experienced investor who knew went to come out and when not to. We continued buying different securities and allocated our assets in different investments such as bonds, stocks, and mutual funds to reduce our risks and increase our total return. However, as we became more knowledgeable in our investing we realized that by diversifying we have not alleviated our entire risk factor because systematic risk (market risk) still exists. We gained an understanding that systematic risk is the only risk that we have no control over because the market can be affected by various uncontrollable factors such as War, inflation, depression, recession, and interest rates. These are all factors that can cause an individual’s portfolio to decline immensely. Therefore, by investing in stocks, bonds, and mutual funds we took upon these unavoidable risks in order to increase our total return substantially.

TABLE OF CONTENTS

A) Description of Fund

B) Investment Objectives

1. Return Requirement

2. Risk Tolerance

C) Constraints

1. Liquidity Needs

2. Time Horizon

3. Tax Consideration

4. Legal & Regulatory requirements

5. Unique Circumstances

D) Market Event & Economic Analysis

E) Investment Strategies & Portfolio Construction

F) Portfolio Monitoring & Balancing

G) Lessons Learned

H) References

I) Description of Mutual Funds

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