Investment Management After Holding a Essay

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Total Length: 2195 words ( 7 double-spaced pages)

Total Sources: 11

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29%

2.1

Man Group

12.56%

12.94%

2.34%

1.5

Marks & Spencer Group

4.60%

17.10%

8.33%

0.8

Meggitt

2.62%

65.59%

4.64%

1.0

Morrison (Wm) Supermarkets

3.66%

13.23%

7.00%

0.4

3.05%

69.65%

25.61%

0.6

Old Mutual

3.24%

26.38%

0.41%

1.5

Pearson

3.77%

50.96%

8.51%

0.8

Petrofac Ltd.

2.15%

62.80%

11.03%

1.5

Prudential

3.47%

14.73%

0.54%

1.6

Randgold Resources Ltd.

0.45%

20.71%

14.89%

0.4

Reckitt Benckiser Group

3.57%

0.00%

12.35%

0.6

Reed Elsevier

4.10%

54.47%

34.72%

0.8

Resolution Ltd.

8.21%

0.00%

-0.05%

1.0

Rexam

3.43%

23.66%

6.14%

0.8

Rio Tinto

2.66%

15.32%

4.87%

1.7

Rolls-Royce Holdings

2.16%

33.86%

5.18%

2.1

RSA Insurance Group

8.88%

15.67%

1.89%

1.0

SABMiller

2.01%

23.13%

6.16%

1.0

Sage Group

3.39%

6.89%

0.9

Sainsbury (J)

5.00%

11.50%

5.61%

0.8

Schroders

2.68%

8.82%

2.27%

1.4

Schroders (Non-Voting)

3.45%

8.82%

2.27%

0.8

Severn Trent

4.18%

7.81%

3.56%

0.4

Smith & Nephew

1.81%

41.03%

12.26%

0.8

Smiths Group

3.52%

44.25%

10.58%

1.1

Standard Chartered

3.20%

13.15%

0.81%

1.3

Standard Life

6.25%

12.32%

0.19%

1.1

Tate & Lyle

3.44%

16.67%

5.34%

0.6

Tesco

4.49%

16.36%

5.62%

0.7

Tullow Oil

0.83%

30.01%

6.10%

1.3

United Utilities Group

5.05%

7.08%

4.91%

0.4

Vedanta Resources

2.79%

13.60%

2.67%

2.2

Vodafone Group

5.25%

13.41%

5.27%

0.4

Whitbread

2.44%

17.73%

8.01%

0.8

Wolseley

1.91%

14.80%

3.44%

1.3

WPP

2.93%

73.30%

3.34%

1.2

Optimal Portfolio

After carefully analyzing the table 1 and calculating the financial measures of all stocks in Table 1, we select one high performing stock from every industry listed to have well diversified portfolio.

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Based on our analysis, we did not select stocks from banking industry because they have relative high risks negative returns and high standard deviation as well as having negative excess return and negative beta. Additionally, we removed the insurance sector from the list because the firms under this sector have low returns with relatively high standard deviation, thus, generally having high risks. Based on our evaluation we need a portfolio that have high returns perspective with generally low risks features. We selected our portfolio from the following industry Food Producers & Processors, Support Services; Travel & Leisure, Beverages, General Retailers, Media, and Mining. Our stocks portfolio is composed of the following securities as being revealed in Table 2.

Table 2: 10 Best Stocks Selected

COMPANY NAME

Industry

Dividend Yield

Return on Capital

Employed (ROCE)

Return on Assets

BetaBeta

Stock 1

Associated British Foods

Food Producers & Processors

2.08%

13.12%

5.30%

0.5

Stock 2

Bunzl

Support Services

2.64%

48.41%

4.52%

0.8

Stock 3

Compass Group

Travel & Leisure

3.03%

7.74%

0.7

Stock 4

Diageo

Beverages

2.66%

31.77%

9.61%

0.6

Stock 5

Experian

Support Services

1.81%

0.00%

7.92%

0.9

Stock 6

G4S

Support services

3.01%

27.70%

3.22%

0.7

Stock 7

General Retailers

3.05%

69.65%

25.61%

0.6

Stock 8

Pearson

Media

3.77%

50.96%

8.51%

0.8

Stock 9

Randgold Resources Ltd.

Mining

0.45%

20.71%

14.89%

0.4

Stock 10

Tate & Lyle

Food Producers & Processors

3.44%

16.67%

5.34%

0.6

Adjustment of our Approach

This section discusses the adjustment of our.....

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