3. Case Study 3.1 BlackRock Inc. Asset Management You are the Managing Director of BlackRock Inc. Ass

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3. Case
Study
3.1 BlackRock Inc. Asset
Management
You are the Managing Director of BlackRock Inc. Asset Management
team. You are in charge of a $5M fund pool. Your clients have
instructed you to invest the fund in global equity markets. You are
specifically instructed to create a portfolio for your clients
using 4 equity products of which at least 1 should be
a US equity product. Use the Bloomberg terminal (or other
similar databases) to select and gather data for these assets. The
following conditions apply:
1. Your clients indicated that you are to
invest all of the $5M fund in these assets and provide
recommendations for the next 12 months.
2. You should describe the risk attitude
of your clients. They can roughly be divided into those who want to
maximise return for a given level or risk, or minimise risk for a
given level of return. You have the freedom to
choose.
3. As the managing director and based on
your world renowned reputation, you have the discretion to take a
long and a short positions in these assets. For example, if you
employ both a long and a short positions, then it is possible for
your long position to go over $5M for as long as the total long and
short positions is $5M.
4. Your clients also require you to
provide rationale for the assets chosen in the investment. For
instance, if you decide to invest in ‘TSLA’ stock, the rationale
behind this decision (e.g. transparency, liquidity, growth,
returns, etc.). You can also add Key Performance Indicators (KPIs)
such as income statement, balance sheet, financial ratios, segment
data, credit ratings, earnings estimate, relative performance,
share price performance, etc.) to your analysis.
5. In terms of historical trade data, you
should use and/or analyse a minimum of 5 years’ worth
of data at a monthly frequency. Please include
COVID-19 periods in your data selection and
analysis. Bear in mind that if some of the assets are
UK and/or EU equity assets, you will also need to think about the
Brexit implications in your decision.
3.2 Required
BlackRock Inc. Asset Management department has asked you to
write a report outlining your recommendation as to which assets
your clients should invest in. When compiling this report, your
clients expect to see tables outlining the respective relevant
information for each of these assets as well as appendices
demonstrating all relevant calculations.
When preparing the report, you have been asked to address the
following points:
1. Calculate the average return on the
asset, the standard deviation of the asset’s returns as well as a
risk-adjusted return measure for the asset.
2. When conducting your fundamentals
analysis, that you use the top-down approach to justify your choice
of markets and assets.
3. That you find and highlight the key
findings of relevant research or literature (including newspapers
articles, investor reports, etc.) on each of the asset classes and
specific markets.
3.3 Structure of the
Report
The report should be structured as follows:
1. COVER PAGE, which should contain:
(a) A relevant title for the report.
(b) The word count for the report (excluding the
title page, executive summary, table of contents, tables and
figures, appendices, and references).
2. TABLE OF CONTENTS, which should
contain:
(a) A full list of sections (including executive
summary, references, bibliographic materials, and any
appendices).
(b) The page number of which each section begins.
3. EXECUTIVE SUMMARY, which should:
(a) Highlight the key points and findings of the
report.
(b) Be in the third person and use the present tense,
e.g. “This report compares…”.
4. INTRODUCTION, which should:
(a) Give a succinct explanation of the aims, scope
and context of the report.
(b) Include brief details and definitions for any
information necessary for the reader to understand thereport.
5. MAIN BODY, which should:
(a) Provide the main critical analysis of the
different markets and securities as well as any relevant research
on the topic.
(b) Provide relevant figures and compare this with
the respective base lines.
6. CONCLUSION, which should
(a) Briefly summarise the aims and key findings of
the report.
(b) Make a recommendation to BlackRock Inc. Asset
Management Team as to how the team should invest providing
justifications for recommendations
4. Assessment
Criteria
The assessment will be assessed based on the following
criteria:
Criterion
Weighting
1. Clarity of research purpose and objectives
5%
2. Research and referencing
10%
3. Critical understanding of relevant theory
30%
4. Accuracy of calculations
15%
5. Quality of analysis
30%
6. Conclusions and recommendations
5%
7. Structure and coherence
5%
7.REFERENCES & BIBLIOGRAPHY, which should:
(a) The list of references lists the details of any
material that have actually been cited in the report (full details
of the source should be given using the Westminster Harvard
referencing system).
(b) The bibliography lists the details of any other
sources that you may have referred to when preparing the report but
not actually cited in the report itself (full details of the source
should be given using the Westminster Harvard referencing
system).
8. APPENDIX, which should:
(a) Provide calculations for the figures used in the
report and highlight the respective formulae used.
(b) Include any other material that you feel may be
relevant but does not warrant being included in thereport.