Mode and Requirements for submission
This coursework is individual. All the relevant material for the project should be contained in an appropriate Excel workbook. Material not contained in the workbook will not be marked.
Topic: Portfolio Performance Monitoring System
You are a Financial Modelling consultant and have been asked by a Portfolio Manager of SMB Advisory and Technology Services (SMATS), to produce a simple tool which would allow the portfolio manager to monitor the performance of 5 different portfolios constructed from 5 underlying securities.
Each of the 5 portfolios contain the same securities but it is expected that the exposure of any of the Portfolios to the 5 underlying securities may be different in order to ensure that the five portfolios have different risk and return profiles that may be suitable for different investors.
The Portfolio Manager has indicated that it is important that your proposed tool is able to seamlessly integrate with their Research and Portfolio Management Database. You are not expected to implement this integration but the Technology Services Department at SMATS has provided you with a Data template layout as presented in Appendix A.
The Portfolio Manager would particularly like the flexibility to be able use your tool to monitor any five portfolios each of which would have exposure to any 5 underlying securities. He has also hinted that he is aware that the majority of their existing portfolios have 5 holdings each but that there is a strategic plan to increase the diversification of their portfolios. He is concerned that your tool may become unusable once the plan is implemented and he would like you to write a report to provide some comfort and to explain how your proposed solution can continue to be applied when their portfolios become more diversified. The Manager is comfortable with having to limit the number of portfolios, being monitored, to 5. He understands that Greater flexibility to handle more portfolios will require you spending more time on the project and on balance the Manager prefers to have the solution completed and deployed quickly at minimum cost.
The submitted coursework will be assessed according to the following criteria:
1. Demonstration of understanding of the key challenges facing the Portfolio Manager
2. Quality and clarity of the proposed solution
3. Quality and reliability of the XLS application;
4. Ease of use of the application;
5. Relevant interpretation of the case;
6. Provision of insight into the relevance and impact of any assumptions made;
7. Demonstration of understanding of any shortcomings of the proposed solution;
8. Proposal of the relevant risk and return measures that the Portfolio Manager could effectively use in comparing the portfolios being monitored.
Your XLS ?Portfolio Performance Monitoring System? needs to implement the following portfolio theory;
It is part of the project requirement that you investigate, propose and calculate relevant performance and risk measures for the portfolio and to present the measures in both tabular and graphical form for ease of comparing the performance of the five portfolios over any given time horizon.
Your attention is drawn to the additional notes and comments presented with the data template.
Make sure the user is presented with relevant choices of the key inputs and informative presentation of the key outputs. Use appropriate graphical representations of the results to ensure ease of use and interpretation of the results from your model.
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