You just started your internship at Prime Value Asset Management. Your mentor Clive asked

you to write a client report for a couple by the name of David and Belinda Tang.

David is a $45-$year$-$old land surveyor who works for the City of Whitehorse council, while his

wife Belinda is a human resources consultant at Monash University. Due to Belinda$$s

employment at Monash University, both David and Belinda have their superannuation accounts

with UniSuper. David is a risk taker, so he chooses the Growth investment strategy for his

superannuation money while Belinda invests her super in the Conservative investment option.

The couple shares a portfolio of assets comprising of equity in ANZ and BHP as well as a

studio apartment in Bayswater that Belinda inherited from her grandfather. The couple live in

a $3-$bedroom mortgaged house in Clayton and are paying off the mortgage using their salaried

income. Apart from the mortgage payments, they have a range of other living expenses leaving

them with a small combined annual saving.

Clive provided you with the following extract of the client profile that captures important

information regarding David and Belinda assets and incomes. Client profile:

David tang:

Current age $>45$

annual income $>120,000$

superannuation balance $>155,000$

super performance $(5$ years$)>6\mathrm{.}80\%$

super contribution rate $>11\%$

average income tax rate $>30\%$

expected annual saving rate $>10$$

Client Profile Belinda Tang:

age $>42$

annual income $>95,000$

superannuation balance $>88000$

super performance $(5$ years$)>4\%$

super contribution rate $>17\%$

average income tax rate $>26\%$

expected annual saving rate $>6\%$

Combined Assets:

ANZ shares $>10,000$

BHP shares $>15000$

Studio apartment $>300000$

Rental yeild $>4\%$

ANZ historical return inc div $>5\mathrm{.}29\%$

BHP historical return inc div $>11\mathrm{.}80\%$

The Association of Super Funds Australia $($ASFA$)$ suggests that to achieve a modest retirement

lifestyle, a couple would require $$45,800$ a year $($based on today currency$)$ assuming that they

own their home and are relatively healthy. However, David and Belinda aspire to have a

comfortable retirement that allows them some luxuries such as overseas travel and fine dining.

This is estimated to cost $$70,000$ a year $($based on today currency$).$ The current plan is for the

couple to retire at the same time when David is $63$ and Belinda $60$ and they expect to have $25$

years in retirement. While their current plan is to retire when they are $63$ and $60$ respectively, David and Belinda

do not rule out the possibility of early retirement if they can afford to do so$.$ David and Belinda currently invest in ANZ and BHP shares as detailed in their client profile.

However, Belinda heard from her colleagues at Monash that ETFs is a good choice to diversify

investment risks. Belinda has never heard of ETFs before, and she requested Prime Value to

provide her with information on what an ETF is and the advantages and disadvantages of

investing in an ETF. She also sought recommendation from Prime Value for $1$ ETF that covers

the Australian market to invest in$.$ Alternatively, she also wants ETF recommendations that

provide exposure to the NASDAQ. David and Belinda do not have a foreign currency trading

account, so they are seeking recommendations on ETFs that are listed on the Australian

Securities Exchange $($ASX$).$

Note from Clive: The NASDAQ is an American stock exchange based in New York city. It is

a very active stock trading exchange based on volume.

You should structure this section as follows:

$$ What is an ETF?

$$ The advantages and disadvantages of investing in ETFs

$$ Recommended ETFs $(1$ ETF that tracks the Australian market and $1$ ETF that tracks

the NASDAQ index$).$ Do not recommend any ETF that has less than $5$ years of trading

history. Ensure that you explain in detail what these ETFs are tracking to David and

Belinda.