INVESTMENT OPTIONS REPORT.

The investor is a 40-year-old Mrs. Mary Smith living in the United States, a wife and a mother of two. She is employed and earns $ 80,000 annually with a 401K pension plan. Her husband is also employed and makes $30000 per year. They both have an outstanding balance of $200000 on their mortgage charged at 5% interest per year for the next 30 years. They also do have a pending loan of $20000 on their two cars. She intends to invest $250000 with an absolute return value weighted at 50% the % increase in $250,000 portfolio in a 5 week period May 30, 2016 to July 3, 2016, and a risk-adjusted return weighted at 50% which is the return measured by Sharpe ratio over the same duration of five weeks. The securities will range from stocks, bonds, and mutual funds. These securities are expected to yield returns as expected by the client.  This report details the investment objectives, an analysis of the investment decisions made, the 2016 economic scenario that led to those decisions, and a detailed investments allocations.  Decisions in this report were made over a nine week duration from April 25, 2016 to June 26, 2016, with an initial trial period of one month.  Discussion on the economic scenario covers U.S economic scenario, and the effects of technology companies stocks due to technological advancement, dependence and use. We discuss what drove the decisions to invest on the particular companies and how that can be justified in terms of the returns expected.

Investment Objectives

The aim is to ensure an appropriate risk is considered for an absolute return value of 50%. As stated by the customer, a risk adjustment of 50% would be expected.  It is very important to find long-term stocks, bonds and cash allocations as these will also reduce the maintenance cost of the portfolios over the trading duration.  It will be an added advantage if sales charges and taxes can reduce too so as to increase the profits. The portfolio will be managed through tactical strategies. In anticipation of retirement it would be appropriate to apportion the investments as follows; 15% in bonds, 55% foreign stock and for the children 30% of mutual funds.

 The current US economy is still recovering from a recession, low crude oil prices and unpredictable outcome of Brexit referendum in June 2016 which are some of the factors that could affect many parameters of an investment portfolio. Given this, we will ensure that the risk premium is in itself proportional to its exposure to systematic risk. Meaning that we will have to diversify the portfolio to ensure a better chance with reduced risk. Regarding the clients preference of 50% risk adjustment, any asset that is half as risky will be apportioned half the initial premium. The market is recovering, and hopes are high that it will only get better with time, it is thus a good time to invest. In a bull market, negative beta assets perform below expectation, as there is a lower chance of returns. It is, therefore, necessary to avoid negative-beta assets at all costs as they would lead to a higher risk leading to losses that the client does not expect. Many startup businesses (in technology or businesses that are driven by technology) are coming up and in the wake of disruptive and randomly evolving technologies most legacy companies are on the brink of closure too as the fight to remain relevant in a world that is changing so rapidly. Hence it would be important to invest in technology stocks as they stand to make more returns.