FPC008 Investment Advice - Assessment Question

Question 2 Asset allocation (17 marks | Word limit: 750 words)

(a) (i) Discuss the benefits of including fixed income in Tex’s portfolio? (2 marks)

(ii) Select one fund from the Australian fixed income APL and one fund from the international fixed income APL and provide reasoning and justification for their inclusion in Tex’s portfolio. In your answer, address Tex’s concerns regarding investing in fixed income. (4 marks)

(iii) Briefly discuss the problems with the benchmark indexes (risks) of the international fixed income asset class and the currency hedging issues that can arise. (2 marks)

(b) (i) Tex stated that he is ‘too scared’ to invest in alternative investments as he has been told they are ‘too volatile’. Describe how you would explain to Tex why alternatives investments can be of benefit within a portfolio. In your response, specifically discuss the concepts of risk and diversification.
(3 marks)

(ii) Review the Partners Group Global Value Fund (AUD) Wholesale Fund (APIR code: ETL0276AU) PDS and provide three arguments for or against potential inclusion of this fund in Tex’s ABC Super portfolio. (3 marks)

(iii) Describe two issues you have identified in relation to the property component of Tex’s portfolio and explain what you would do to address these issues. (3 marks)