You are responsible for managing a $1,000,000 portfolio for a local community organisation. The managing committee has heard that by investing in shares and other financial instruments, the community trust could achieve a higher return than what is currently earned through an internet maximiser account. The committee has heard that you are currently studying a unit on security analysis and portfolio management. You are requested to build a portfolio of investments by the end of July 2021, track the performance of your portfolio on a weekly basis and submit a report by 5 September 2021. You may consider the following steps in your portfolio construction and management:

Part 1

Prepare an investment policy statement for the local community organisation based on what you learn in Topic 1. You may specifically consider the (i) liquidity requirements; (ii) return requirements; (iii) risk tolerance; (iv) time horizon; (v) tax considerations; (vi) regulatory and legal considerations; and (vii) unique needs and circumstances. Further given the sensitivities of the members of the organisation, you are asked to avoid investments that are seen to be socially and ethically NOT responsible. Further, money that to be allocated to risky portfolio needs to be invested in ethical investments. In addition, you are required to invest 25% of funds specifically in ethical funds.

Part 2

The local community organisation is considering a mix of equity, debt and cash (or money market securities). You are asked to determine a capital allocation strategy by considering the current and future economic situation, government policy and monetary conditions. You are required to suggest a capital allocation strategy. For example a mix of 40% equity, 40% debt and 20% cash (and marketable securities) may be suitable for an organisation or an individual pursuing a balanced portfolio. Prepare an account of why the chosen capital allocation is appropriate for the local community organisation.

Part 3

Having decided on a mix of capital allocation, you are now required to choose specific investments for equity and debt. In addition, you are required to invest 25% of funds in income ethical funds. You should give due consideration to possible diversification benefits when considering investments from different sectors or industries. You are required to prepare an explanatory statement as to why the specific investments (shares, bonds and others) are chosen.

Part 4

Prepare a report showing details of the above steps with timelines and tracking performance of your portfolio on a weekly basis at least for the month of August 2021. You should compare the performance of your portfolio with a suitable bench mark.