QUESTION 1 TSHEPISO, CFA works for FINTEC investment company and is a senior advisor on an investment portfolio of the Suncity orphanage childrens hope project. The portfolio is invested in UK real estate, UK equities, UK gilts, Australian bonds and equities. TSHEPISO is considering adding an additional asset class to the fund of investments. The Sharpe ratio of the current portfolio is 0.30. The following are the details of the asset classes which TSHEPISO is considering: EXHIBIT 1 Japanese Nikkei 225 tracker ETF Predicted Sharpe ratio = 0.14 Correlation predicted with the current portfolio = 0.55 Australian real estate Predicted Sharpe ratio = 0.21 Correlation predicted with current portfolio = 0.80 German Dax tracker Unit Trust Predicted Sharpe ratio = 0.20 Correlation predicted with the current portfolio = 0.68 Botswana Domestic index tracker Predicted Sharpe ratio = 0.18 Correlation predicted with the current portfolio = 0.50 Botswana Industrial index tracker Predicted Sharpe ratio = 0.20 Correlation predicted with the current portfolio = 0.85 Required: 1. Advice with valid reasons on the asset classes most likely to be added to the portfolio by Tshepiso. [20 marks]