Before addressing the related questions you will need to complete the following steps:
Step 1: Go to ASX (n.d.). (Links to an external site.) (Australian Securities Exchange) website and select:
one fund from A-REITS
one fund from Infrastructure Funds
two funds from ETF & ETCs.
Make sure these funds have been in the market for at least 30 months (July 2016 to February 2019). In addition, use the following criteria in your selection:
A) A-REITS: Use the first alphabet in your first nameto select the A-REITS with the same
alphabet, i.e. if you name is Michelle, then you could select either MPS, MGR or MIX. If
your name is Henry and there is no fund starting with H on the list, then go to the next
alphabet in the sequence, i.e. you could choose either IEF, IOF or ILF.
B) Infrastructure Fund: Any fund of your own choice.
C) International / Strategy ETF: Select one from either – International ETFs, International
Sector ETFS, Cash & Currency ETFs, Fixed Income ETFs or Commodity ETF & ETCs.
Step 2: Form a portfolio and apply the following allocation:
International / strategy ETF
25% 20% 45% 10%
Allocation (2019) created by Swinburne Online
Identify the top three assets owned by the Infrastructure fund selected from B) Infrastructure, over the last two financial years. This information is available from the annual reports of the fund or DatAnalysis.
(i) Justify your decision as to why you have selected the fund from the list in C) International ETF. What makes you choose this fund over the others?
(ii) Identify three potential factors that might influence the performance of the fund over the next 12 months.
Note: There are thousands of events happening in the market every day and financial markets are closely integrated. The factors you have selected must have a direct impact to the fund of your choice. Otherwise one could relate the typhoon in Brisbane to the flap of a butterfly’s wings in Brazil.
Download their monthly closing prices for the last 31 months (from DatAnalysis or Yahoo! Finance).
Using ASX S&p200 as the benchmark of your portfolio’s return, measure the performance of the
return of your portfolio:
Calculate the excess return of your portfolio.
Calculate the absolute tracking error of your portfolio over the period.
Discuss your observation from (1) and (2).
Investigate, over the last two years, how much your investment portfolio is influenced by:
the return and volatility of the AUD/USD exchange rate
the best allocation across these 3 funds if you wish to lower your overall return to total risk by 1%?