Partners Healthcare Case Solution Essay

One important factor to consider with assets is the power assets possess. Our core text “Introduction to healthcare financial management, by Smith provides an explanation of the power of assets, and how assets contribute to a lower interest rate. An investment proposal with limited assets will be a breaking point in relation to interest rates. Providing relief in this situation would be dependent on money contributed by shareholders, direct investors (partners), and government affiliates in which I will discuss further in my week four, part two’s assignment.

One of the methods utilized by this company is an asset allocation model, this model offers the clients multiple strategies they can use such as investing in growth fund this plan does not have much payout for the investor and the risk is higher. The next is Income fund

Advisors and investors would do well to pay as much attention to the expected volatility of any portfolio or investment as they do to anticipated returns. Moreover, all things being equal, a new investment should only be added to a portfolio when it either reduces the expected risk for a targeted level of returns, or when it boosts expected portfolio returns without adding additional risk, as measured by the expected standard deviation of those returns. Lesson 2: Don’t assume bonds or international stocks offer adequate portfolio diversification. As the world’s financial markets become more closely correlated, bonds and foreign stocks may not provide adequate portfolio diversification. Instead, advisors may want to recommend that suitable investors add modest exposure to nontraditional investments such as hedge funds, private equity and real assets. Such exposure may bolster portfolio returns, while reducing overall risk, depending on how it is structured. Lesson 3: Be disciplined in adhering to asset allocation targets. The long-term benefits of portfolio diversification will only be realized if investors are disciplined in adhering to asset allocation guidelines. For this reason, it is recommended that advisors regularly revisit portfolio allocations and rebalance

mix of assets? What benchmark return might they expect for their current level of risk?

The securities below the slope are overvalued stocks because for a given systematic risk the expectation is high . (Sharpe , 1964)

The sector has become an important component of a balanced investment portfolio in recent times.

Alex Sharpe should invest in Portfolio A, consisting of Reynolds and S&P500. Portfolio A gives higher return with lower risk. The standard deviation and the variance are both lower for portfolio A which means

The portfolio which combines 30% or less investment in T-Bill and 70% or more investment in stock C will e superior to portfolio 6 which combine 50% investment in stock A and 50% investment in stock C.

Return Objective – The fund seeks a short-run total return proportional to its risk tolerance. Based on the segmented strategic asset allocation, the fund looks to receive a return

On the other hand, the Balanced Strategy has a strategic asset allocation of 38.0% liquid growth, 27.7% alternatives and 34.3% liquid defensive with an investment objective of maximizing the earnings rate subject to a greater than 60% probability of exceeding CPI+3.0% pa. over rolling 7 year periods. This strategy is ideal for members with medium term investment

Portfolio optimisation is a method of calculating and generating the maximum profit for the investors by allocating the initial capital into various asset classes. During the procedure, investors must consider the rate of return as well as the potential financial risks that could affect the expected value and accuracy of asset allocation decisions. Markowitz’s Modern portfolio theory builds up the foundation of solving portfolio optimisation problem nowadays using standard deviations to estimate the span of risk where investments with higher returns tend to have more risks accordingly.

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The standard deviation and Sharpe ratio are used to assess the risk each investment holds relative to the returns it expects to yield. RYCPX generated a standard deviation of 0.13 for a three year period and a standard deviation of .11 for a five year period. It also expected annual returns to be .19 for a three year period and .16 for a five year period. Therefore, future funds can be expected to annually gain between .06 and .32 for a three year period and .05 and .27 for a five year period. XLP generated a standard deviation of .08 for a three year period and .1 for a five year period. It also expected annual returns to be .21 for a three year period and .16 for a five year period.

Investors always seek for a way that they can get back greatest return while enjoying minimized risk. Instead of investing in a single asset, holding a portfolio is obviously less risky. However, how to select the best portfolio among tens of thousands of assets in today’s financial market? The stringent need of investors promote the raising of modern portfolio theory. In 1952, Harry Markowitz [1] established the fundamental model of modern portfolio theory: the Markowitz model, also called the mean-variance model. This model aimed to achieve a tradeoff between the expected return and the risk of return. As shown in Figure 1, among all efficient portfolios, the efficient frontier consisted of all those with highest return at each given risk level. C_1,C_2,and C_3 were the investors indifference curves which showed that traders prefer portfolios with high return or low risk. The tangent point R of the highest indifference curve and the efficient frontier gave the optimized portfolio.

A successful investment plan will have a high level of specificity and purpose. Each investment is made with a particular purpose in mind. Even investments that don’t seem to have any type of relationship with one another will be part of an overall strategy in which they play a substantial role.