Portfolio Construction – top-down investment process – asset allocation and bench marking against an index
Outline to be covered in your report for part 1 – asset allocation:
Select and describe the index as the benchmark to be followed, with the focus on the sector weightings and the available investment universe . Some index-tracking in the respect to the sectors would be recommended. It has to reflect your investment objective and investment philosophy to be described briefly as well. Consider risk and ethical issues in your selection of benchmark and stocks.
Review the historical performance of the selected index over the period of last 10 years and the changes in the index composition .
You can find it helpful to review also the performance of your competitors found by the relevant screening criteria in the Morningstar as guided in the WEBmaster after Ch4 of the textbook p 109. It will make your portfolio choice and benchmark selection a more market-informed decision with the consideration of your risk-return expectations.
Additionally, search on line for some coverage of the expected US stock performance for the investment period you are planning for as your guidance.
Assume your target annul portfolio turnover with the objectives behind
Select only and exactly 10 different stocks from the selected index, please choose the weights , consider the sector weights as compared with the composition of the index.
