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Appendix. 1 Client Profile: Mr. Tan, 35 years old, BA (Law), MA (Law), Juris Doctor, Barrister at Slater and Gordon Singapore. Mr. Tan specialises in
Appendix. 1 Client Profile: Mr. Tan, 35 years old, BA (Law), MA (Law), Juris Doctor, Barrister at Slater and Gordon Singapore. Mr. Tan specialises in corporate law and has some understanding of finance but cannot be considered a sophisticated investor in the financial markets. Mr. Tan's assets are estimated at 5 million Singapore dollars. He is willing to take a reasonable amount of risk, and his primary objective is to achieve portfolio appreciation over time. For this, he is prepared to accept an elevated level of portfolio volatility and the risk of principal loss. His investment time horizon is 3 to 5 years. Mr. Tan is cost-conscious and prefers cost-effective investment management solutions such as index funds for his portfolio. However, he expects you to carefully select the most promising funds and create a successful investment strategy. Mr. Tan is initially looking to invest 2 million Singapore Dollars in your recommended funds. You suspect the client may have overconfidence bias and home bias. \begin{tabular}{|l|l|l|} \hline Date & Daily Return & Annual Return (Estimated) \\ \hline 18 Sep-23 & -0.0049 & 3.47% \\ \hline 15 Sep-23 & 0.0052 & \\ \hline 14 Sep-23 & 0.0048 & \\ \hline & & \\ \hline 3-Jan-23 & \#DIV/0! & \\ \hline \end{tabular} Date DailyPrice Daily Retul Annual return MSCl Emerging market Index AI Annual Risk free rate \begin{tabular}{l|l|l|} \hline 18-Sep-23 & 1.4744 & -0.00493 \\ \hline \end{tabular} 3.47% 0.04 \begin{tabular}{|r|r|r|} \hline 15Sep23 & 1.4817 & 0.005224 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 14-Sep-23 & 1.474 & 0.004772 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 13Sep23 & 1.467 & -0.00048 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 12Sep23 & 1.4677 & 0.001501 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 11Sep23 & 1.4655 & 0.000273 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 8-Sep-23 & 1.4651 & -0.00109 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} 7-Sep-23 & 1.4667 & -0.00724 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 6-Sep-23 & 1.4774 & -0.00182 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 5-Sep-23 & 1.4801 & 0.003594 \\ \hline \end{tabular} \begin{tabular}{l|l|l|} \hline 4-Sep-23 & 1.4748 & 0.00841 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline 1-Sep-23 & 1.4625 & 0.010084 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 31-Aug-23 & 1.4479 & -0.00645 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 30-Aug-23 & 1.4573 & -0.00546 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 29-Aug-23 & 1.4653 & 0.005352 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 28Aug23 & 1.4575 & 0.003719 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 25Aug23 & 1.4521 & 0.002762 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 24-Aug-23 & 1.4481 & 0.012162 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 23-Aug-23 & 1.4307 & 0.003155 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 22Aug23 & 1.4262 & 0.005783 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 21Aug23 & 1.418 & -0.00056 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 18Aug23 & 1.4188 & -0.00414 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 17-Aug-23 & 1.4247 & 0.001547 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 16Aug23 & 1.4225 & 0.003173 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 15Aug23 & 1.418 & -0.00672 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 14-Aug-23 & 1.4276 & -0.0062 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 11Aug23 & 1.4365 & -0.00388 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 10Aug23 & 1.4421 & -0.0029 \\ \hline \end{tabular} \begin{tabular}{l|l|l|} \hline 9-Aug-23 & 1.4463 & 0.001038 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 8-Aug-23 & 1.4448 & -0.00145 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 7-Aug-23 & 1.4469 & -0.00179 \\ \hline \end{tabular} \begin{tabular}{lr|r} 4-Aug-23 & 1.4495 & -0.00275 \end{tabular} - Considering Mr. Tan's preference for cost-effective index funds and his pursuit of promising returns, provide an overview of funds in his portfolio. - Evaluate the historical performance, risk, and return of these funds compared to benchmark indexes. - Address potential overconfidence bias in Mr. Tan and propose a diversified fund selection strategy. - Introduce one or two new funds aligned with Mr. Tan's needs and your expertise. - Explain fund measurement by calculating the coefficient of variation and Sharpe ratio using the provided data and provide an interpretation of calculations. Appendix. 1 Client Profile: Mr. Tan, 35 years old, BA (Law), MA (Law), Juris Doctor, Barrister at Slater and Gordon Singapore. Mr. Tan specialises in corporate law and has some understanding of finance but cannot be considered a sophisticated investor in the financial markets. Mr. Tan's assets are estimated at 5 million Singapore dollars. He is willing to take a reasonable amount of risk, and his primary objective is to achieve portfolio appreciation over time. For this, he is prepared to accept an elevated level of portfolio volatility and the risk of principal loss. His investment time horizon is 3 to 5 years. Mr. Tan is cost-conscious and prefers cost-effective investment management solutions such as index funds for his portfolio. However, he expects you to carefully select the most promising funds and create a successful investment strategy. Mr. Tan is initially looking to invest 2 million Singapore Dollars in your recommended funds. You suspect the client may have overconfidence bias and home bias. \begin{tabular}{|l|l|l|} \hline Date & Daily Return & Annual Return (Estimated) \\ \hline 18 Sep-23 & -0.0049 & 3.47% \\ \hline 15 Sep-23 & 0.0052 & \\ \hline 14 Sep-23 & 0.0048 & \\ \hline & & \\ \hline 3-Jan-23 & \#DIV/0! & \\ \hline \end{tabular} Date DailyPrice Daily Retul Annual return MSCl Emerging market Index AI Annual Risk free rate \begin{tabular}{l|l|l|} \hline 18-Sep-23 & 1.4744 & -0.00493 \\ \hline \end{tabular} 3.47% 0.04 \begin{tabular}{|r|r|r|} \hline 15Sep23 & 1.4817 & 0.005224 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 14-Sep-23 & 1.474 & 0.004772 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 13Sep23 & 1.467 & -0.00048 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 12Sep23 & 1.4677 & 0.001501 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 11Sep23 & 1.4655 & 0.000273 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 8-Sep-23 & 1.4651 & -0.00109 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} 7-Sep-23 & 1.4667 & -0.00724 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 6-Sep-23 & 1.4774 & -0.00182 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 5-Sep-23 & 1.4801 & 0.003594 \\ \hline \end{tabular} \begin{tabular}{l|l|l|} \hline 4-Sep-23 & 1.4748 & 0.00841 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline 1-Sep-23 & 1.4625 & 0.010084 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 31-Aug-23 & 1.4479 & -0.00645 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 30-Aug-23 & 1.4573 & -0.00546 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 29-Aug-23 & 1.4653 & 0.005352 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 28Aug23 & 1.4575 & 0.003719 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 25Aug23 & 1.4521 & 0.002762 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 24-Aug-23 & 1.4481 & 0.012162 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 23-Aug-23 & 1.4307 & 0.003155 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|r|} \hline 22Aug23 & 1.4262 & 0.005783 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 21Aug23 & 1.418 & -0.00056 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 18Aug23 & 1.4188 & -0.00414 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 17-Aug-23 & 1.4247 & 0.001547 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 16Aug23 & 1.4225 & 0.003173 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|r|} \hline 15Aug23 & 1.418 & -0.00672 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 14-Aug-23 & 1.4276 & -0.0062 \\ \hline \end{tabular} \begin{tabular}{|l|r|r|} \hline 11Aug23 & 1.4365 & -0.00388 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 10Aug23 & 1.4421 & -0.0029 \\ \hline \end{tabular} \begin{tabular}{l|l|l|} \hline 9-Aug-23 & 1.4463 & 0.001038 \\ \hline \end{tabular} \begin{tabular}{|l|l|l|l|} \hline 8-Aug-23 & 1.4448 & -0.00145 \\ \hline \end{tabular} \begin{tabular}{|r|r|r|} \hline 7-Aug-23 & 1.4469 & -0.00179 \\ \hline \end{tabular} \begin{tabular}{lr|r} 4-Aug-23 & 1.4495 & -0.00275 \end{tabular} - Considering Mr. Tan's preference for cost-effective index funds and his pursuit of promising returns, provide an overview of funds in his portfolio. - Evaluate the historical performance, risk, and return of these funds compared to benchmark indexes. - Address potential overconfidence bias in Mr. Tan and propose a diversified fund selection strategy. - Introduce one or two new funds aligned with Mr. Tan's needs and your expertise. - Explain fund measurement by calculating the coefficient of variation and Sharpe ratio using the provided data and provide an interpretation of calculations
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