• April 15th, 2016


Paper, Order, or Assignment Requirements

First Name: H
List of A-REITS: http://www.asx.com.au/products/etf/managed-funds-etp-product-list.htm

Part One (total of 35 marks)
The Australian Security Exchange (ASX) boasts one of the biggest Exchange Traded Funds (ETF) in the region.

Go to ASX website1 and select 1 fund from each of the following category: A-REITS, Infrastructure Funds plus 2 funds from ETF & ETCs. Make sure these funds have been in the market for at least 2 years. In addition, use the following criteria in your selection:
a. A-REITS: Use the first alphabet in your first name to select the A-REITS with the same alphabet. i.e. if you name is Michelle, then you could select either MPS, MGR or MIX. If your name is Henry and there is no fund starting with “H” on the list, then go to the next alphabet in the sequence. i.e. you could choose either IEF, IOF or ILF.
b. Infrastructure Fund: Any fund of your own choice.
c. Australian ETF: 1 fund selected from either Australian Broad Based ETFs or Australian
Sector ETFs category
d. International/Strategy ETF: 1 fund selected from either: International ETFs, International
Sector ETFS, Cash & Currency ETFs, Fixed Income ETFs or Commodity ETF & ETCs.
Form a portfolio and apply the following allocation

(b) Infrastructure
(c) Australian ETF
(d) International/Strategy ETF
(e) Cash

Question (i) (10%, 500 words)
1. Identify the top 3 assets allocated by the infrastructure fund and the profit distribution of the infrastructure fund for part (b) over the last 2 financial years. These are usually available from the annual reports or DatAnalysis
2. (i) Justify your decision to your selection of fund for parts (c) Australia ETF and (d) International ETF. Why have you decided to select these particular funds over the others?
(ii) Identify three potential factors that might influence the performance of the fund over the next 12 months.
• There are thousand and one events happening in the market every day and financial markets
are closely integrated. The factors you have selected must have a direct impact to the fund of your choice. Otherwise one could relate the typhoon in Brisbane is set off by the flap of Butterfly’s wings in Brazil.
Question (ii) (25%, 400 words)
Download their monthly closing or average prices for the last 2 years (from DatAnalysis or Yahoo! Finance).
(a) Calculate the performance (return) of your portfolio and compare it against the return of the benchmark ASX S&P200 index, that is:
i. Using ASX200 as your benchmark calculate excess return and the tracking error of your portfolio
ii. Discuss your observation from part 3 a (i).
1 http://www.asx.com.au/products/managed-funds-product-list.htm
FIN30016 Assignment 2 2016
Page 2(b) Investigate over the last 2 years, how much your investment portfolio is influenced by
i. The return and volatility of the Australian Dollar?
ii. Return of the China equity markets?
(c) What are some potential reasons funds allocated some of its investment to cash (such as (e)) in their portfolio? (Identify one and discuss)
• You can select which ever method of tracking error covered in Chapter 20 of the textbook.
• When you are trying to answer, if your portfolio is influenced by XYZ factor, you could use
either regression analysis or correlation.
• Your answer to Q3 part (a) should not be just “yes”, “no” or “I think”. Provide some
justifications in terms of “how strong/weak” the relationship is. That is your conclusion has to be justified by a quantitative measure. Making conclusions based on two lines on a graph does not meet the quantitative measure requirement. Actual investment is not just about some gut feeling.
Part Two (total of 15 marks, maximum 700 words)
“…stock exchanges [are] helping companies raise funds while at the same time providing an investment avenue for those with savings. Side by side with stock exchanges are the world‘s stock markets. It is the stock market which allows investors to change their investment decisions. Whereas the stock exchange provides rules .and regulations and administrates the stock market “ Bennetts, R.J.(2004)
You are required to 2
1) explain the role and size of the share market of South Africa , including how it has
developed, its growth over the last decade, and how it is regulated.
2) Compare or contrast the difference between the Australian equity market and the one at South Africa market.
Note: While this assignment is more of applied nature, appropriate referencing, reference list is still expected.

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