Your clients, Virat and Suzy Smith, met with you a week ago because they were seeking some advice regarding how to invest a sum of money that is maturing from a GIC in two weeks. At that time you established that they did not want to invest in individual stocks, bonds, and money market instruments, but wanted the entire amount invested in mutual funds. Although you explained to them that they should select mutual funds from various different companies, they told you that they only wanted to use Dynamic mutual funds because Suzy has an administrative position at that company. They have informed you that they are seeking similar investment advice from at least one other financial advisor at another financial institution, and they are willing to invest with you if you produce the best proposal. You have had a chance to do some research and now you are about to present your recommendations.

Your clients currently have the following financial assets and major personal use assets:

$$ a house worth $$1,000,000,$ with a $$700,000$ mortgage

$$ a joint $$190,000$ GIC maturing in two weeks at a competitor$$s financial institution $($this money was originally inherited$)$

$$ a joint $$40,000$ non$-$redeemable GIC maturing in $3$ years at your financial institution

$$ each of them has a savings account with a balance of $$15,000$

$$ Virat$$ RRSP has $$40,000$ in a $5-$year non$-$redeemable GIC at a competitor$$s financial institution

$$ Suzy$$s RRSP has $$50,000$ in a $3-$year non$-$redeemable GIC at your financial institution

$$ neither spouse has a pension plan where they work and each earns approximately $$90,000/$year

$$ they are both in their early $40$s$,$ they have three children between $9$ and $15$ years old

$$ both spouses have mainly invested in guaranteed investments in the past, and therefore have only a very limited amount of experience investing in equities

Questions:

$1.$ Given the information above, create a portfolio of mutual funds for their non$-$registered account using the entire amount that is maturing from the GIC in two weeks.

Ensure that the portfolio meets their suitability requirements.

Create the mutual fund portfolio using only $5$ different Dynamic mutual funds.

Your proposed portfolio should include the fund name, fund code, amount invested, and percentage of portfolio occupied by each of the mutual funds.

$2.$ Asset allocation is known to be an important component of portfolio management. Approximately what percentage of your proposed portfolio is invested in:

a$.$ equities

b$.$ fixed income

c$.$ money market

d$.$ cash

Show how you calculated those values. You may need to access various information sources beyond the Fund Facts documents to help you.

$3.$ Explain why the $5$ funds chosen are the ideal combination for this family at this time in their lives. Emphasize those features that make your selected funds stand out. Issues such as various measures of rates of return, level of volatility, management expense, portfolio manager$$s investment philosophy, as well as other relevant issues, should all be addressed in your discussion.

$4.$ Produce the Fund Facts sheets for each of the five funds in your proposed portfolio, as well as any other supporting documentation