The Scenario for Finance Report
You are beginning your new job with Patriot Wealth Strategies, a mutual fund family managing approximately $50 billion in assets. Patriot has a variety of funds with various objectives. You and two or three of your associates, as a group, have been asked by management to create and manage a new fund based on your own ideas, benchmarking the performance of the fund against an existing index. You have learned that the other forty new associates at Patriot have received similar assignments, and that the performance of each fund will be evaluated by management 10 weeks after the inception of each fund.
Management has indicated that, although, the fund’s total return as measured against the chosen benchmark is certainly important, due to the short time horizon, the novelty and effectiveness of your investment strategy may be even more important in making you stand-out as the next star money manager of the firm (and the recipient of the biggest year-end bonus).
Final Project Report:
This report will be sent to your investors at the end of the investment period and will give them a summary of the fund performance. Investors want to know how the fund has performed compared to your initial plan. After reading your report, investors will decide whether they should continue to invest in your fund or should they change the amount of funds they put in your group.
Your report should be within 8 pages, double-spaced (consult a mutual fund year-end report for a general idea of what to include). You may append tables and figures (no more than 5 additional pages) at the end of the report as supporting documents.
Guidelines for Preparing the Final Report: Finance Report
- Cover page: Title, authors, date, etc.
- Abstract: A short paragraph summarizing the main points of the report (fewer than 100 words).
- Introduction: Briefly describe the following. What have accomplished in the project? What are your investment goals, your investment benchmark, and trading strategy? How did your fund perform relative to the market? Specify some main performance metrics, such as the Sharpe ratio. At the end of your Introduction, briefly lay out the organization of the remaining part of your report.
- The Fund: Describe in detail your investment strategy and why you chose this strategy for your fund. What are the main holdings in your fund? Why did you choose these securities? Which are the major winners and the major losers? Did you make profit by long or short positions? What kind of orders did you place (e.g. market orders, limit orders)? You may append tables to present your results and facilitate your discussion, and refer to the appended tables in the text.
- Performance Evaluation: In this part, you discuss the rate of return of your fund over the investment period. How does it compare with the market, and the other groups? You may plot returns in a graph for ease of comparison. How risky is your fund – the beta and the volatility. What are the performance metrics of your fund, including the Sharpe ratio and Treynor measure? You may append tables to present your regression analysis and summary statistics.
Finance Report assignment
You may further interpret the empirical results and discuss their implications. What have you done correctly and what would you change in managing your fund? If your strategy did not perform as you expected in the investment period, you would want to discuss why. Or, if you believe the results do not fully reflect the effectiveness of your strategy, explain why you think so. If you have many securities in your portfolio, you can choose to focus on a select few to discuss in detail.
- Conclusion and Discussions: Summarize the main points of your report. What have you learned from the fund management performance evaluation?
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