ADMS 4501 S3-20 - ETF Assignment

Client profile: Assume you have just received a year-end bonus of $50,000 from your first year of full-time employment since graduating with your York B.Comm (hons) degree. You are Canadian, single and do not need any of the portfolio for income. You plan to invest the $50,000 for the next 5 years, perhaps for a future house downpayment.

Part 1: 14 marks

Build a balanced portfolio based on the Client Profile below, using at least 5 different ETFs.

At least one ETF must be active, and two ETFs must be Alternative Investment ETFs.

• You must give a brief description of each ETF including whether it is active or passive, hedged or unhedged and the MER. The description must be in your own words; do NOT cut and paste or major marks will be deducted)
• Risk profile of the portfolio (low, medium, high)
• Where the ETF is traded (which exchange)
• Any other important facts
• Expected return of each ETF (Using past 5 year average annual return, if available)
• Expected risk level and return of your portfolio
• Explain why you have chosen the asset weights that you are using and each ETF (i.e. justify why your portfolio is balanced and fits with the client profile)

Part 2: 4 marks

Compare your balanced portfolio (Part 1) with the iShares XBAL (60/40) or XGRO (80/20) (you need to decide which one is a more appropriate benchmark/comparison for your portfolio)

Compare on an (i) expected return, (ii) risk and (iii) MER basis

Part 3: 2 marks

Conclusion: Which is a better portfolio for you (your customized ETF portfolio or XBAL/XGRO) and why?

Other:

• Can be done individually, or in pairs (note: some of the assignment may be tested on the final, so dont just add your name to another persons work)
• Maximum 2-3 pages (for content) but charts can be used.
• Page 3 needs to contain a bibliography (not MLA but include specific URL links you used. E.g. not ishares.com)

Resources for ETF issuers:

• www.ishares.com; www.bmoetfs.ca www.vanguardcanada.ca
• www.horizonsetfs.com
• Other ETFs are acceptable
• Extra ETF Resources are also posted on eCLass
• A Sample Part 1 is posted on Moodle. Please review. You can not use any of the ETFs listed in that sample.