“Fair and Efficient Performance Reviews”Suppose you were recently promoted to a supervisory job in a company where you have worked for two years. You genuinely like almost all your co-workers, who
Retirement Plan and Portfolio
General Description:
Each student prepares a retirement plan for him/herself. The project requires the application of the principles of investments, financial planning, and retirement planning. The project will involve extensive outside research, a written narrative and an accompanying oral presentation (see below for a description). The narrative must answer all of the listed items, calculations should be attached to the report, and screen prints of mutual fund statistics should be included. The analysis and discussion of the results should be at least 5 pages in length, not including charts, graphs and financial data. The presentation should have a discussion of the effect of age on asset allocation and risk undertaking. Students should adhere to proper inclusion of research information within the body of their project. APA style citations, references, and headings should be used.
Specific Requirements for Narrative Portion:
The client investment portfolio must contain the following segments in the order noted:
Discuss the factors that affect the development of an investment portfolio, such as the client’s age, risk tolerance, retirement goals, and retirement income needs. Write at least one page explaining the effect of each of these factors on the development of the portfolio. (This part is due with the final paper, Ten points.)
Asset Allocation Tool Questionnaire
Assume that you have $100,000 to invest for your client (You are the client, so base it on your preferences).
Visit the website
https://nationwidefinancial.com/iApp/pub/advicetools/assetAllocationDecision.action
and complete the Asset Allocation Tool questionnaire from your retirement plan’s point of view. The questionnaire will give you a suggestion for a target asset mix based on your answers; it basically gives you recommendations for weights of various types of fund categories. If you desire, you may allocate the money among those fund categories using the recommended weights. An example is in Weekly Materials Week 3.
(Submit a screen print of the questionnaire by Day 7 of Week 3. Ten points.)
Fund Allocation table
Pick at least 5 mutual funds, each with different objectives such as “growth”, “growth and income”, “index”, “international,” etc. or objectives based on the Nationwide target mix suggestions. Each mutual fund must have a 10-year history to be eligible for the project. You can mix and match fund companies. No-load or load mutual funds may be use, but do not include the sales charge for load funds. Please do not invest in money market funds and do not split the money evenly among the 5 funds because that would defeat the academic purpose of this project.
Prepare a fund allocation table, listing the fund’s name, symbol, investment objective (Found in Morningstar Direct under Operations Overview of the Fund), the weight of the investment, e.g., $15,000 equals 15%. An example is in Weekly Materials Week 4 Required Reading.
(The Fund Allocation Table should be submitted by Day 7 of Week 4, Ten points.)
Mutual Fund Questionnaire
For each fund, answer the mutual fund questionnaire located in Weekly Materials Week 5 Required Reading.
(The completed fund questionnaires should be submitted by Day 7 of Week 5,
Ten points/ fund x 5 funds = 50 points.)
Compound Annual Growth Rate
Calculate the 10-year compound annual growth rate (CAGR) for each mutual fund investment using information on websites such as
https://www.extendoffice.com/documents/excel/2596-excel-average-compound-growth-rate.html#cagr1
http://www.investopedia.com/ask/answers/071014/what-formula-calculating-compound-annual-growth-rate-cagr-excel.asp
(In the final report, add the 10-year compound rate of return of each mutual fund to the Fund Allocation Table mentioned in item # 3.
Four points/fund x 5 funds = 20 points.)
Weighted Average Return
Calculate the weighted average return of your portfolio.
Portfolio Return = W1R1+W2R2+W3R3+W4R4+W5R5, where W(I)=Weight of fund (a) in your portfolio, and R(i) is the 10-year compound annual growth rate for each fund.
(Include this return in the narrative portion of the final report. Ten points.)
7 Mutual Fund Beta
Obtain the 10-year Beta of each mutual fund at the end of the most recent calendar year.
Calculate weighted average Beta of the portfolio =W1B1+W2B2+W3B3+W4B4+W5B5
(In the final report, add the 10-year Beta of each mutual fund to the Fund Allocation Table described in item # 3. Ten points.)
Risk-adjusted Portfolio Return
Calculate the risk adjusted return on your portfolio using the Treynor measure:
Treynor = Rportfolio - 30-day T-Bill Rate
(Include this return in the narrative portion of the final report. Ten points.)
Explain the effect of international funds on risk reduction, at least a page.
(Include this return in the narrative portion of the final report. Twenty points.)
Class Presentation (for online classes)
(Each student presents his/her portfolio, emphasizing the effect of age, risk tolerance and investment horizon on asset allocation and investment return. Fifty Points)
Use PowerPoint slides.
In lieu of oral presentation, develop a narrative script using the notes pane option in PowerPoint.
Begin by introducing yourself, topic and format.
Use both upper case and lower-case font along with various outline icons.
Present the portfolio, emphasizing the effect of age, risk tolerance and investment horizon on asset allocation and investment return.
References must use APA format and must accompany the project report.
Final Fund Allocation Table Format due with the Paper:
Mutual fund name, symbol, objective, weight, 10-year compound annual growth rate, Beta.
The table should end with the portfolio weighted average return, weighted average Beta, and Treynor’s risk-adjusted return.
(Submit the PowerPoint presentation and final report as directed in Weekly Materials Week 7 Day 4.)
