Ashford FIN680 Investor Policy Statement Essay

FIN 680 Ashford University Investor Policy Statement Essay

Your firm has been hired by a new client: a charitable organization with a sizeable foundation (an operating foundation). The client would like to receive a proposal for the management of its investment portfolio. For this proposal, you have been asked to construct an initial investment portfolio for its foundation. You will create an initial investment report for this client that proposes the policy statement, the asset allocation strategy, the asset selections, and the rebalancing policy, as described below.

For this assignment, choose one charitable institution that is an independent organization. American Red Cross. Familiarize yourself with the mission of the charity, its annual operating expenses, and its financial strengths.

The charity client has now requested additional information on your proposed portfolio. For this report, you will analyze the portfolio returns, select and justify benchmarks, determine portfolio performance attribution, and identify potential risks.

In your paper,

• Prepare a table that summarizes the 1-week return of each investment and the portfolio, as well as a whole for your institutional client.
• Calculate the annualized return for each investment and the portfolio as a whole based on the 1-week return data.
• Calculate the 1-year historical return for each investment through the current date.
• Calculate the weighted average 1-year return for the portfolio as a whole based on the weights of each investment and each investment’s 1-year historical return.
• Explain the 1-year return of the portfolio on an absolute basis relative to the return objective you developed for the investor policy statement (IPS) in your Week 5 Institutional Portfolio Investment Report assignment.
• Identify benchmarks for each investment.
  • These could be absolute returns or broad market indexes, style indexes, or a combination.
• Justify the chosen benchmarks based on the following characteristics:
  • Ambiguity
  • Investable
  • Measurable
  • Appropriate
  • Specified in advance
• Calculate the 1-year return for each chosen benchmark for the same time period used to calculate the 1-year return for each investment.
• Critique the portfolio using performance attribution.
  • Explain the performance of each asset in comparison to its benchmark.
• Summarize the performance of the portfolio as determined by the individual assets’ under- or over-performance compared to the benchmarks and their weights within the portfolio.
  • Explain at least two unique risk factors to the portfolio within each of the following categories:
    • Market risk
    • Credit risk
    • Liquidity risk
    • Regulatory risk
    • Sovereign/political risk
    • Environmental, social, and governance (ESG) risk