Question

The S&P 500, or simply the S&P, is a stock market index that measures the stock performance of 500 large companies listed on stock exchanges in the United States.

define an adequate investment strategy, and select the assets they would invest to start with.

-the potential customer profile specifications (SAP 500),

-the portfolio objectives

-the investment policies (strategic allocation)

-The choice and justification of a benchmark

-a trial portfolio based on the team investment guidelines

-a brief evaluation on each of the equity securities selected

At this initial phase, you are to limit the number of equity securities purchases to five only.

Please write 500-700 words minimum and in details

Answer 1

The iS&P i500 iIndex ior ithe iStandard i& iPoor's i500 iIndex iis ia imarket-capitalization-weighted iindex iof i500 iof ithe ilargest ipublicly itraded icompanies iin ithe iU.S.. iIt iis inot ian iexact ilist iof ithe itop i500 iU.S. icompanies iby imarket icapitalization. ibecause ithere iare iother icriteria ito ibe iincluded iin ithe iindex. iThe iindex iis iwidely iregarded ias ithe ibest igauge iof ilarge-cap iU.S. iequities. iOther icommon iU.S. istock imarket ibenchmarks iinclude ithe iDow iJones iIndustrial iAverage ior iDow i30 iand ithe iRussell i2000 iIndex, iwhich irepresents ithe ismall-cap iindex.The iS&P idoes inot icurrently iprovide ithe itotal ilist iof iall i500 icompanies ion iits iwebsite, ioutside iof ithe itop i10. iMany iof ithe itop icompanies iin ithe iS&P i500 iinclude itechnology ifirms iand ifinancial ibusinesses.

The ibest ithing iabout iinvesting istrategies iis ithat ithey’re iflexible. iIf iyou ichoose ione iand iit idoesn’t isuit iyour irisk itolerance ior ischedule, iyou ican icertainly imake ichanges. iBut ibe iforewarned: idoing iso ican ibe iexpensive. iEvery ipurchase icarries ia ifee. iMore iimportantly, iselling iassets ican icreate ia irealized icapital igain. iThese igains iare itaxable iand itherefore, iexpensive.

iBy itaking ithe itime ito iunderstand ithe icharacteristics iof ieach, iyou iwill ibe iin ia ibetter iposition ito ichoose ione ithat’s iright ifor iyou ioBefore iyou ifigure iout iyour istrategy, itake isome inotes iabout iyour ifinancial isituation iand igoals.

Value iinvesting irequires iinvestors ito iremain iin iit ifor ithe ilong-term iand ito iapply ieffort iand iresearch ito itheir istock iselection.

Investors iwho ifollow igrowth istrategies ishould ibe iwatchful iof iexecutive iteams iand inews iabout ithe ieconomy.

Strategy i1: iValue iInvesting

Value iinvestors iare ibargain ishoppers. iThey iseek istocks ithey ibelieve iare iundervalued. iThey ilook ifor istocks iwith iprices ithey ibelieve idon’t ifully ireflect ithe iintrinsic ivalue iof ithe isecurity. iValue iinvesting iis ipredicated, iin ipart, ion ithe iidea ithat isome idegree iof iirrationality iexists iin ithe imarket. iThis iirrationality, iin itheory, ipresents iopportunities ito iget ia istock iat ia idiscounted iprice iand imake imoney ifrom iit.

It’s inot inecessary ifor ivalue iinvestors ito icomb ithrough ivolumes iof ifinancial idata ito ifind ideals. iThousands iof ivalue imutual ifunds igive iinvestors ithe ichance ito iown ia ibasket iof istocks ithought ito ibe iundervalued. iThe iRussell i1000 iValue iIndex, ifor iexample, iis ia ipopular ibenchmark ifor ivalue iinvestors iand iseveral imutual ifunds imimic ithis iindex.

Strategy i2: iGrowth iInvesting

Rather ithan ilook ifor ilow-cost ideals, igrowth iinvestors iwant iinvestments ithat ioffer istrong iupside ipotential iwhen iit icomes ito ithe ifuture iearnings iof istocks. iIt icould ibe isaid ithat ia igrowth iinvestor iis ioften ilooking ifor ithe i“next ibig ithing.” iGrowth iinvesting, ihowever, iis inot ia ireckless iembrace iof ispeculative iinvesting. iRather, iit iinvolves ievaluating ia istock’s icurrent ihealth ias iwell ias iits ipotential ito igrow.

A igrowth iinvestor iconsiders ithe iprospects iof ithe iindustry iin iwhich ithe istock ithrives. iYou imay iask, ifor iexample, iif ithere’s ia ifuture ifor ielectric ivehicles ibefore iinvesting iin iTesla. iOr, iyou imay iwonder iif iA.I. iwill ibecome ia ifixture iof ieveryday iliving ibefore iinvesting iin ia itechnology icompany. iThere imust ibe ievidence iof ia iwidespread iand irobust iappetite ifor ithe icompany's iservices ior iproducts iif iit’s igoing ito igrow. iInvestors ican ianswer ithis iquestion iby ilooking iat ia icompany's irecent ihistory. iSimply iput: iA igrowth istock ishould ibe igrowing. iThe icompany ishould ihave ia iconsistent itrend iof istrong iearnings iand irevenue isignifying ia icapacity ito ideliver ion igrowth iexpectations.

Strategy i3: iMomentum iInvesting

Momentum iinvestors iride ithe iwave. iThey ibelieve iwinners ikeep iwinning iand ilosers ikeep ilosing. iThey ilook ito ibuy istocks iexperiencing ian iuptrend. iBecause ithey ibelieve ilosers icontinue ito idrop, ithey imay ichoose ito ishort-sell ithose isecurities. iBut ishort-selling iis ian iexceedingly irisky ipractice. iMore ion ithat ilater.

Think iof imomentum iinvestors ias itechnical ianalysts. iThis imeans ithey iuse ia istrictly idata-driven iapproach ito itrading iand ilook ifor ipatterns iin istock iprices ito iguide itheir ipurchasing idecisions. iIn iessence, imomentum iinvestors iact iin idefiance iof ithe iefficient-market ihypothesis i(EMH). iThis ihypothesis istates ithat iasset iprices ifully ireflect iall iinformation iavailable ito ithe ipublic. iIt’s idifficult ito ibelieve ithis istatement iand ibe ia imomentum iinvestor igiven ithat ithe istrategy iseeks ito icapitalize ion iundervalued iand iovervalued iequities.

Strategy i4: iDollar-Cost iAveraging

Dollar-cost iaveraging i(DCA) iis ithe ipractice iof imaking iregular iinvestments iin ithe imarket iover itime, iand iis inot imutually iexclusive ito ithe iother imethods idescribed iabove. iRather, iit iis ia imeans iof iexecuting iwhatever istrategy iyou ichose. iWith iDCA, iyou imay ichoose ito iput i$300 iin ian iinvestment iaccount ievery imonth. iIt’s ieasy ito icommit ito ia iplan iwhen ithe iprocess irequires ialmost ino ioversight.

OBJECTIVES iOF iPORTFOLIO iMANAGEMENT

When ithe iportfolio imanager ibuilds ia iportfolio, ihe ishould ikeep ithe ifollowing iobjectives iin imind ibased ion ian iindividual’s iexpectation. iThe ichoice iof ione ior imore iof ithese idepends ion ithe iinvestor’s ipersonal ipreference.

· Capital iGrowth

· Security iof iPrincipal iAmount iInvested

· Liquidity

· Marketability iof iSecurities iInvested iin

· Diversification iof iRisk

· Consistent iReturns

· Tax iPlanning

Investors ihire iportfolio imanagers iand iavail iprofessional iservices ifor ithe imanagement iof iportfolio iby ias ipaying ia ipre-decided ifee ifor ithese iservices. iLet ius iunderstanding iwho iis ia iportfolio imanager iand itasks iinvolved iin ithe imanagement iof ia iportfolio