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Assignment 3: Portfolio Project – Instructions and Submission
In the project for FNCE 3151 you will apply many of the lessons learned throughout the course to real world investments. Because of the wide scope of the course, you need to use many sources of data to answer the various questions.
The main goal of the project is to create a theoretical portfolio for yourself or someone that you know as a client. This will involve choosing stocks and estimating their value, buying mutual funds, and understanding what choices you need to make and what behavioural biases you may exhibit. Your hypothetical portfolio will start off with CAD 1,000,000 (one million Canadian dollars).
Aim to complete your Portfolio Project soon after completing Unit 10 of the course. Building on your proposal, you should incorporate the lessons of Units 9 and 10 as well as any feedback from your Open Learning Faculty Member before the final exam.
In this assignment, you will need to provide the following information:
Update your proposal based on any feedback received from your Open Learning Faculty Member. This will also inform your answers to the rest of the questions.
Five mutual funds that you want to include in your portfolio. These can be any fund that is available in Canada. Clearly explain why you chose these funds. For example if you choose a bond fund – why did you choose this particular bond fund over any other?
An estimate of the beta of one of the chosen stocks, as discussed in Unit 4. Estimate this yourself, using the tools discussed, and compare it with an estimate that you find online.
A valuation of one of the ten chosen companies, using the Dividend Discount Model presented in Unit 7. Make sure to clearly explain your assumptions and the sources of data used.
A summary of your asset allocation (include a chart!) and a justification for why it suits your client. You can allocate the $1,000,000 between the 10 stocks and 5 mutual funds.
A description how the fund performed over the past 12 months. This is a unique opportunity to look at performance without having had to hold the assets! This may include some qualitative discussions (such as any news which might have affected prices), but should also include quantitative measures such as Sharpe ratio and a comparison to an appropriate benchmark. Include a chart with the performance of your portfolio and of the benchmark.
A discussion of what you learned from this course in general and the project in particular, as well as any challenges you faced and how you overcame them.
The Portfolio Project will count for 20% of your final mark and should not exceed 2000 words including your updates of your proposal. Review the Assignment Rubric so you can see how marks will be awarded