Question 1 Mr. Leonard Lee, 40 years old, is a technopreneur who recently returned to Singapore from Silicon Valley. A private equity fund paid him USD 250 million for a 90 percent stake in his chip design firm. He has agreed to remain an advisor with the firm and not sell his remaining stake five (5) years after the acquisition. Upon returning to Singapore, he bought a good class bungalow for SGD 54 million[1] and has set aside SGD 20 million to start a tech incubator for new startups. He does not expect income from this investment over the next ten years and has set aside SGD 10 million for liquidity needs. Whatever returns from this investment will be rolled over to help budding local technopreneurs. Mr. Lee is unmarried and does not have any plans to do so, given his U.S. and Singapore commitments. After his firm's sale, Leonard's current wealth is USD 150 million in bonds, with the remaining wealth in USD bank deposits. Leonard has become concerned and is keen to plan his retirement in about ten years better. He has become especially concerned about the low rates of returns from his bonds investment and bank deposits. Given that Leonard has sold his equity in his own company, he thinks that he should invest about US$100 million in a core portfolio comprising global equity and global bonds. He has also heard of the benefits of alternative assets and is open to investing a meaningful portion in funds that invest in such assets. Lastly, while Leonard thinks he can take on higher risks, having adequate resources to enjoy a comfortable retirement is essential. He estimates his annual expenses at USD 1 million. Leonard explicitly stated he is concerned about inflation and the longer-term value of fiat currency. Question

1a (a). Modern portfolios may include exposure to so-called alternative assets. Evaluate the challenge of having alternative assets in an individual's investment portfolio. (20 marks)

Question

1b (b). Leonard has just changed his mind about his investment goals. He wishes to make a more significant impact on the tech scene. In addition, to invest funds in a tech incubator locally, he plans to invest half his current wealth in a tech incubator for Indonesia, Vietnam, and the Philippines in three years. Design a Goal-based Wealth Management (GBWM) solution for Mr. Leonard Lee (40 marks)