Investment Portfolio Research Paper Example | Topics and Well Written Essays - 2500 words

Investment Portfolio - Research Paper ExampleIt involves providing concise mode of communicating the process and objectives amongst all parties involved with the investment fundss and to assign responsibility for implementations. (Winfield R. G. and Curry S. J., 1995.)Once the Investment Policy has been established other factors affecting the investment much(prenominal) as financial and economic conditions, and risk factors will be examined. How to allocate the 100,000 to specific assets will be determined. RiskGrades will be used for optimal allocation. RiskGradeTM monetary standard is an open and transparent benchmark to measure the risk of the worlds financial assets. Another optimization criterion to be looked at briefly is the Markowitz co-variance approach. According to Markowitz, (1952), the co-variance matrix gouge be used to compute portfolio variance. Peter Zangari (1996)s document on risk metrics assumes that the market is driven by risk factors with observable co-var iance. These risk factors which fill been incorporated in the analysis take on time series of prices or levels of stocks, currencies (foreign exchange rates), commodities and interest rates.The evaluation of investment performance is very important to every investor. Evaluation goes hand in hand with re-examining the policies and altering the strategies. The constructed portfolio will be monitored throughout the period under review. The reasons why it is performing in a trustworthy way is examined.Policy StatementThis is a statement of Investment Policy and investment goals, which establish the investment management procedures. The five basic components of the statement include Summary of investor dowry.Investment objectives, time horizon and risk attitudes.Permissible asset classes, constraints and restrictions.The asset allocation decisions.Selection, monitoring and control procedures.For an investor, investment policy depends on circumstances (Winfield, 2005). Institutional i nvestor will be concerned with long-term investments as opposed to an individual investor who will be limited to personal factors such as financial situation, age, family circumstances, and personal preferences to risk. An elderly investor will invest in investments which are short-term though the risks might be high as opposed to a unfledged investor. Diversification comes in for the issue of risks. Diversification is a risk limiting strategy. Since I am a young investor, I would like to diversify my investment and also take a greater amount of risk to enhance the potential earnings on the investment.According to Winfield (2005), as a