Im not understanding the asset allocation

and is it refering to all three

COLORADO TECHINCAL UNVERSITY CORPORTAE PORTOFOLIO MANAGEMENT INDIVIDUAL PROJECT 3 Mr. Coplin May 2, 2016 Situation: James O'Hara, an ABC client, is a single, 37-year-old, self-employed plastic surgeon who currently owns a condominium in Tiburon, CA, worth $1.4 million. James is doing quite well financially. His gross income from his practice last year exceeded $350,000. Upon graduation from medical school, he began investing in stocks and opened an IRA. He made his selections mostly on the basis of articles he read describing good investment opportunities in various personal finance magazines. Because of his hectic schedule, Dr. O'Hara has seldom taken the time to evaluate his portfolio performance, but he feels it is not quite up to par. Dr. O'Hara currently has about $350,000 in investable funds with about $130,000 currently invested in several stocks at a local discount brokerage house, as well as an IRA account funded with three mutual funds that are currently worth about $170,000. After working with a staff financial planner and investment advisor at ABC, the following investment strategies have been drafted for Dr. O'Hara based on his financial needs and objectives: Dr. O'Hara will contribute the maximum allowable yearly contribution to his newly established private practice 401(k) plan, which will also be managed and monitored by ABC. The account is to be funded with only one well-performing mutual fund. The fund investment objectives must include the ability to earn market returns consistently and minimal yearly management fees. A sum of $30,000 is to be earmarked for Dr. O'Hara's upcoming wedding and honeymoon trip in June of next year. Dr. O'Hara wants this portion invested in a very safe place with no expense, sales, or early withdrawal charges. Dr. O'Hara is also planning to assist his nephew with medical school expenses in 3 years. To this end, he wants $60,000 earmarked in an account with higher than current certificate of deposit or money market rates but minimal market volatility. Dr. O'Hara's average, long-term (5 years and on) minimum required rate on equity investments is 9%. Dr. O'Hara's risk tolerance questionnaire indicates that he is a moderately aggressive investor. 1. Construct an asset allocation model for Dr. O'Hara given his financial objectives and risk tolerance level. 2. o Explain and defend the rationale behind recommending the model. o The asset allocation must have between 3 and 5 asset classes. Recommend a suitable investment alternative for Dr. O'Hara's wedding and his nephew's tuition assistance objectives. o Thoroughly explain and defend your recommendations. 3. Recommend a suitable mutual fund for Dr. O'Hara's 401(k) plan. Provide detailed information about the fund, including the following: The name of the fund AllianzGI retirement 2020 Fund A (A o Its portfolio manager's name, experience, and qualifications Paul Pietranico Mr. Pietranico, CFA, is a senior portfolio manager and a director with Allianz Global Investors, which he joined in 2005. As a member of the Multi Asset US team, he has direct responsibility for target-date portfolio risk profiles, asset allocation and fund selection. Mr. Pietranico also participates in research and analysis for the team's 529 programs and portfolios. He has 18 years of investment-industry experience. Mr. Pietranico has a B.S. in physics, an M.A. in philosophy of science, and an M.S. in engineering economic systems and operations research from Stanford University. Claudio Marsala Mr. Marsala is a portfolio manager and a director with Allianz Global Investors, which he joined in 2001. As a member of the Multi Asset US team, he manages multi-asset mandates for retail and institutional clients. Mr. Marsala previously led the quantitative efforts of the firm's Multi Asset team. Before that, he worked in risk management. Mr. Marsala has 13 years of investment-industry experience. He has a degree in economics and financial markets from the University of Pisa in Italy, and a master's degree in quantitative finance from the University of Turin. Rahul Malhotra Mr. Malhotra, Ph.D., is a portfolio manager and a vice president with Allianz Global Investors, which he joined in 2012. As a member of the Multi Asset US team, he is responsible for quantitative research and development. Mr. Malhotra has seven years of investmentindustry experience. He has a B.S. in physics from the California Institute of Technology and a Ph.D. in theoretical particle physics from the University of Texas at Austin. o o Its investment philosophy and strategy Seeks capital growth and preservation consistent with its asset allocation as the target date in the Fund name approaches, and thereafter current income, and, secondarily, capital appreciation o How long this fund been in existence. 12/29/2008 o Its current NAV $18.39 o Its yearly management fees, which must not exceed 1% of amount invested o The fund's 1-year, 3-year, and 5-year returns* Year one -1.26 Year three 1.05 Year five 2.53 o An assessment of some of the risks involved in investing in this fund The Fund is designed to have a reliable-risk profile, with a targeted focus on expected volatility. It seeks to balance after-inflation capital appreciation and preservation of purchasing power throughout the accumulation and withdrawal phases. As the end-date approaches, the lower-volatility defensive portfolio becomes increasingly prominent, seeking downside protection through a high allocation to defensive assets. 4. Assuming a risk-free rate of 4%, the following data were derived after a close examination of Dr. O'Hara's IRA mutual fund portfolio: Fund Average Annual Return Beta Franklin Domestic Fund 0.078 0.950 Scudder Pacific Basin Fund 0.125 1.250 American Mortgage Securities Fund 0.0750 0.25 PORTOFILO RETURN RISK FREE RATE BETA TREYNOR FRANKLIN DOMESTIC FUND 0.078 0.04 0.95 0.035895 SCUDLER PACIFIC BASIN FUND 0.125 0.04 1.25 0.093 AMERICAN MORTGAGE SECURITIES FUND 0.075 0.04 0.25 -0.085