You are hired as a fund manager in the Fund Management Company where your job is to manage the accounts of high net worth clients and usually clients net worth is more than 10 million therefore high due diligence is required in construction of portfolio. You have interviewed the client to know her financial health and jot down some points:-

Current age is 45 years

Source of income is passive, currently employed in an organization since 10 years and no plan for startup new business due to fear of failure.

The objective of the client to save 2.5 million in next 5 years along with finance her children fees till next 3 years more and each year cost around 35,000, in addition to that client also planned a leisure trip which required around 2 million in next 7 years, at last, clients want to preserve its capital by the rate of inflation to eliminate the risk of losing purchasing power parity where expected inflation rate would be at 7.5%.

Current portfolio worth 10 million in which sector allocation mainly to Cements 25%, Steels 20%, Fertilizer 30% and Foods sector 25%.

Mutual funds industry is offering an equity return for a 1-year basis 18% whereas expected rate of inflation in the economy as per analyst consensus around 7.5% however equity market offering 25% return for a year.

Sector Expected Return Beta

Cements 20% 1.80

Steels 18% 1.50

Banks 30% 2.50

Technology 27% 2.30

Fertilizer 15% 1.15

Foods 22% 1.90

After conducting your analysis you come to the point current portfolio allocation is not optimal to the clients objective therefore you have re-allocate the portfolio into different sectors as per your analysis. You believe that Banks/Foods/Technology sector seems much lucrative at the moment and will produce a good return in the future which likely to help in achieving the client needs & aspirational goals.

Prepare the complete portfolio management report in which you mentioned the working of required return which meets the objective completely and construct the portfolio based on your market analysis. In addition to that, first define the investor behavior as per Markowitz portfolio theory and rest of the working will be based on investor's willingness & ability to take risk.