YOUR CLIENT

Your client is Jenny Smith, aged 40. Jenny is an Indigenous Australian from an Aboriginal clan in South-East Queensland. Jenny is a descendent of her Indigenous tribe who suffered the inter-generational trauma from her descendants who suffered atrocities when the British Empire claimed settlement of Australia in the late 1700s. Jenny was recently awarded a large sum of money from a Commonwealth Native Title court settlement valued at A$202 million. Unfortunately, the value of Jenny's court settlement has recently declined to a value of A$131 million. Jenny is a former Griffith Business School (GBS) student and wants to keep $2 million for herself and invest the remaining balance in an investment portfolio which will generate income for Griffith University student scholarships for individuals experiencing financial hardship. Jenny wants the income from the remaining $100 million investment portfolio to fund Griffith University student scholarships today and over the long-term. Jenny believes that with prudent planning, this investment portfolio will grow over time and generate an income stream for Griffith University to help fund these student scholarships. Jenny has approached NEC to develop an investment strategy for the $100 million portfolio.

For further context, approximately one year ago, Jenny approached another asset management firm, Not Gonna Make It Capital (NGMIC) who offered her an investment strategy that promised a return of 7% annually. Jenny was impressed with their investment pitch as they prioritised sustainable investing and cryptocurrencies, which she believes to be a wise decision over the long-term. A year ago, Jenny invested $202 million in the investment strategy recommended by NGMIC.

Things were looking rosy for Jenny last year but then she learnt that her $202 million of assets lost a lot of money and she only has $131 million of capital remaining at this point in time. NGMIC has lost nearly 50% of Jenny's investment capital. Jenny has approached NEC to review her portfolio and to potentially reallocate her assets to better meet her new set of financial objectives.

The management at NEC has assigned Jenny and this investment case to you and your student investment team as the firm wants to give you experience and exposure in investment management. You and your student investment team must build trust and respect with Jenny, given her Indigenous Australian heritage and the fact that she has lost 50% of her capital over the past 12 months. Following the initial meeting with your team of investment specialists, Jenny has stipulated the investment requirements:

[1] The expected annual return should be at least 7% to match that of NGMI Capital.

[2] She is an advocate of sustainable investing and the portfolio needs to align with her beliefs as much as possible.

[3] The portfolio must not be leveraged.

[4] The portfolio must invest in Australian Securities Exchange (ASX) listed exchange traded funds (ETFs) only.

[5] The portfolio must be well-diversified across various asset classes. Each asset class in each geographical region should not contribute more than 30% of the portfolio.

[6] The maximum drawdown acceptable for Jenny is -15% in any year.

As at 31 December 2022 (over 12 months ago), Jenny Smith's portfolio was valued at $202 million and was invested in poor performing ETFs that were exposed to green metal miners, short-selling Nasdaq 100 index, hydrogen industry and Chinese equity market. Jenny's investment portfolio declined in value by -35% in 2023. Jenny Smith's disastrous asset portfolio is worth $131 million and is comprised of the following ETF investments:

Ticker	ASX Listed ETFs	30/12/22	29/12/23	2022 Return	Portfolio Weighting
SNAS	Global X Ultra Short Nasdaq 100 Hedge	$5.53	$1.975	-64.3%	40%
GMTL	Global X Green Metal Miners ETF	$9.92	$7.75	-21.9%	15%
HGEN	Global X Hydrogen ETF AUD	$6.88	$5.49	-20.2%	15%
IZZ	iShares China Large-Cap ETF AUD	$42.8	$37.85	-16.9%	15%
	TOTAL PORTFOLIO				100%

As an experienced businesswoman, Jenny has seen boom and bust cycles in investments and understands how poor risk management can potentially wipe out a lifetime of savings. She believes that NGMIC were poor investment managers and hopes that NEC is a professional organisation that can manage her special Griffith student investment fund over the long-term. In addition to reviewing the investment portfolio, your team must provide a macroeconomic outlook and forward-looking viewpoints of every asset class over the next 12-18 months, which includes potential opportunities, risks and catalysts.

TASK:

The Investment Strategy slide-deck must deliver the following information:

1. Review Jenny Smith's personal circumstances, requirements, risk profile and investment objectives.

2. Demonstrate how you will change her current portfolio allocation to meet her investment objectives and satisfy all of her requirements. In your investment strategy, you must take into account the following:

Overall global market trends; Macroeconomic factors for each asset class and geographical region; Which exchange traded funds (ETFs) you will recommend to implement your strategy; The reasons for your choices and how they align with Jenny's personal requirements and objectives. 3. With so much uncertainty in global markets today, Jenny wants to know how her portfolio will be affected over the years. Considering historical market cycles, business trends and key market events, identify key factors which are significant in contributing to a portfolio drawdown. Explain how you plan to rebalance or hedge against these adverse periods throughout the investment horizon.

The student must construct all of their own graphs using Microsoft Excel which is the industry-standard software used in the global finance industry.

The student must construct all of their own tables using either Microsoft Word or Microsoft Powerpoint which is the industry-standard software used in the global finance industry.

All data must be properly sourced in each graph or table with the full reference detailed in one of the appendices.

Example: