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International Investment Portfolio

You have just been appointed as a fund manager for a multinational firm, with the task of increasing the valuation of the company by 10 percent through international investment. You have been given the sum of GBP100 million to obtain your objective. Your task is to construct a portfolio of international investment that can achieve your objective of increasing the value of the company by 10 percent. What are your choice of securities (stocks, bonds, funds, etc.) and the countries that will be a part of your portfolio? What is your strategy, construction, management and country risk investment?

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As a fund manager, I would like to diversify my portfolio among different asset classes, so that my risks pertaining to investment in international markets and financial instruments is well diversified and at the same time, I am able to earn desired return on my investments.

My first choice will be to invest at least 25% of my portfolio in emerging market mutual funds. As we know, emerging markets have been booming and the capital markets in these countries, especially BRIC countries like Brazil, China, Russia and India, have seen a significant inflow of funds in their equity markets. Taking this into account, I would like to take an exposure in each of these economies by investing in a mutual fund that invests in a range of emerging markets and have provided consistent returns in the past. My strategy will be to allocate the total funds earmarked for this asset class within different fund houses, so that poor performance in one fund house does not effect the return of the entire asset class and risk is well spread. If we compare the annual and three year returns of various fund houses (Source: http://biz.yahoo.com/p/tops/em.html), I will chose funds like ING Emerging Countries Q, which has been top performer last year with approximately 80% returns and Aberdeen Emerging Markets Institutional fund I/S, which has been among the top performers with an ...

Solution Summary

You have just been appointed as a fund manager for a multinational firm, with the task of increasing the valuation of the company by 10 percent through international investment. You have been given the sum of GBP100 million to obtain your objective. Your task is to construct a portfolio of international investment that can achieve your objective of increasing the value of the company by 10 percent. What are your choice of securities (stocks, bonds, funds, etc.) and the countries that will be a part of your portfolio? What is your strategy, construction, management and country risk investment?

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