Client Brief

Your client is a UK private company, which specialises in providing risk management software for clients in the financial sector. The company is owned and managed by its Directors, with offices in London and New York. The company has been trading for about 20 years, and it has amassed a sizeable pension fund for its employees. In addition, the Directors have invested £5 million of their own money directly in UK equities, on a ‘buy-and-hold’ basis. 

Investment Objective 1: Directors’ UK Equity Fund

You will take responsibility for the Directors’ UK Equity Fund. You should make a buy/sell/hold recommendation every week. You should report on the performance of the Directors’ UK equity fund, your sector, and your stock, compared with the original portfolio, for the period 1st January 2022 up to 1st May 2022.

Investment Objective 2: ESG Strategy

The Directors would like you to recommend a strategy that improves the ESG (Environmental, Social, and Governance) performance of the Directors’ UK Equity Fund. Any trades you recommend – which can include short and long positions - should be in equities listed on the London Stock Exchange. You should report on the impact of this proposed strategy vs the FTSE 100, for the period 1st January 2022 up to 1st May 2022.

Investment Objective 3: Employees’ Equity Fund

The company’s employee pension fund is currently investing in the UK small cap firms by tracking the FTSE UK Small Cap Index (Eikon ID: .FTSUKL, or FTSE U K Small Cap in Portfolio and List Manager). Given the current economic condition, the directors are considering switching to investing in large cap stocks by tracking the FTSE 100 Index. They think that large cap stocks will be less risky in economic downturn. You will need to explain the impact of this change on the fund’s performance to the Director by comparing the performance of the two indexes over the period from 1st January 2022 to 1st May 2022. 

Investment Objective 4: Alternative Fund

Assuming your client’s portfolio is currently passively tracking FTSE 100 Index To enhance diversification, you will need to recommend which one in the following assets should be included in their portfolio using correlation analysis with data over the period from 1st January 2022 to 1st May 2022:

Gold (ID: XAU=)

Bitcoin (ID: BTC=BTSP)

UK Real Estate Investment Trust (ID: .FTELUK)

You will also need to discuss the general characteristics of alternative investment with your clients so that they understand this type of investment.