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MOD006934 Managing Finance In Health And Social Care Organisations

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  • Course Code: MOD006934
  • University: Anglia Ruskin University
  • Country: United Kingdom



You are responsible for managing a $500,000 portfolio for a local tennis club. The managing committee has heard that by investing in shares and other financial instruments, the tennis club could achieve a higher return than what is currently earned through an internet maximiser account. The committee has heard that you are currently studying a unit on security analysis and portfolio management. You are requested to build a portfolio of investments by the end of December, 2018, track the performance of your portfolio on a weekly basis and submit a report by 28 February 2019. You may consider the following steps in your portfolio construction and management:

Part 1

Prepare an investment policy statement for the local tennis club based on what you learn in Topic 1. You may specifically consider the (i) liquidity requirements; (ii) return requirements; (iii) risk tolerance; (iv) time horizon; (v) tax considerations; (vi) regulatory and legal considerations; and (vii) unique needs and circumstances. Further given the sensitivities of the members of the organisation, you are asked to avoid investments that are seen to be socially and ethically NOT responsible.

Part 2

The tennis club is considering a mix of equity, debt and cash (or money market securities). You are asked to determine a capital allocation strategy by considering the current and future economic situation, government policy and monetary conditions. You are required to suggest a capital allocation strategy. For example a mix of 40% equity, 40% debt and 20% cash (and marketable securities) may be suitable for an organisation or an individual pursuing a balanced portfolio. Prepare an account of why the chosen capital allocation is appropriate for the local tennis club.

Part 3

Having decided on a mix of capital allocation, you are now required to choose specific investments for equity and debt. You may give due consideration to possible diversification benefits when considering investments from different sectors or industries. You are required to prepare an explanatory statement as to why the specific investments (shares, bonds and others) are chosen.

Part 4

Prepare a report showing details of the above steps with timelines and tracking performance of your portfolio on a weekly basis at least for the months of January and February 2019. You may compare the performance of your portfolio with a bench mark portfolio such as the ASX All Ordinaries.




Portfolio is a part of financial asset which includes shares, bonds, cash etc. each investment have a feature of profit or loss. The profit and loss are the included part of investment. In order to managing of portfolio, Investor have to select the portfolio in which they wants to invest and then compare the weightage of other securities. In the present assignment, financial department of Wells tennis club which is a well-established tennis club of UK. This report will discuss about the preparation of investment policy along with equity, debt and cash. Suitable decision for investment with performance of portfolio of Wells tennis club will also covered in the assignment.


Preparation of investment policy statement

This statement is a written statement that is drafted between two persons in which the first person has to manage the portfolio and second one has to prepare rules for managers. As per this statement, the goals and objectives are cleared for both parties so that they can make strategies for better investment (Abu Hussain and Al-Ajmi, 2012). The management of Wells tennis club has decided the budget for portfolio is around $500000. Statement of investment policy of Wells tennis club can be more understood by as under:

Wells Tennis club

Statement of Investment policy


The main objective behind this statement is to formulate a framework which includes policies, goals, vision and mission of Wells tennis club of UK. Purpose for investment in such kinds of instruments is prepared for using the funds of club in the shares and securities of various big companies through which the company’s profitability and revenue can be maximised (Ozik and Sadka, 2012). With using such kinds of investment the stakeholders of club can get more worth. This statement will be given to all the investment managers of club so as to get suitable funds from investors.

Constraints of Investment

Various constraints of the investment are given as under:

Liquidity requirement – The cited tennis club is a well-known club in UK so, the management wants to spend their funds for increasing the facility of club so that a large number of customers can get attracted towards the club. The managers wants to renovate the tennis court and many other areas of the club (Bayney and Chakravarti, 2012). Liquidity defines how an investment can be done in effective manner. Therefore, the managers of club have to make proper decisions for investment. For this, the management have decided to sell the assets of club as per the changing conditions of market. The managers have decided to enhance the liquidity of club with keeping aside the budget of $500000 for portfolio.

Risk tolerance- Proper investment portfolio is defined as a proper investment of funds which includes lower level of risk and suitable securities (Parker, 2012). On the other hand risk tolerance is a term in which the capacity of tolerance of risk can be suffered by the investor in their portfolio. In the context of Wells tennis club, their managers had evaluated the level of risk tolerance and formulated their portfolio accordingly.

Return requirement – This is considered as an important part of portfolio management. The investors who are investing in the securities always demand for the return. For this, the managers of club have decided to invest their assets so that they can earn the income at the rate5% which is beneficial for achieving the goals and objectives.

Time Horizon – the club wants to operate their function on regularly basis. In order to making investment of any kind it is very essential to setting a specific time period. For this portfolio, the managers have decided 5 year time period for share and debenture. 3 months time period is taken for market securities. An estimation is prepared so that the fluctuation of the market can be experienced.

Tax considerations- The managers of club have consider tax so that the gain from the investment can be estimated in proper manner. As the club are not liable for paying the tax according the guidelines of UK government (Bodie, Kane and Marcus, 2011). It can be beneficial for the managers of club as they wants to investing for the wellness of club and it will also help them in making a portfolio.

Regulatory and legal considerations- The managers of club are following the policies in strict manner due to which they can protect their asset and resources. All the acts and regulations have to consider by the managers so that they can formulate a better investment portfolio. With the help of this acts and regulations managers can easily understand that which security is beneficial for them. Managers have to invest in securities in a proper manner so that they can avoid the options which can harm the brand image of club.

Unique needs and circumstances – the Well tennis club have to implement some unique needs in their investment policies such as if any need can be seemed in the club so that they can withdraw from their invested funds. With the help of it the risk can be overcome and reduced by the managers.


  The managers of Well tennis club have to keep their portfolio in a well-diversified condition because it contains various elements of the firm such as debt rate, fix rate on the invested funds on securities such as treasury bills, commercial papers etc. with the help of it the managers will be able to reduce the risk and make their portfolio in diversified nature. It will also help them in providing profitability to their shareholders.



Capital Allocation Strategies

Managers of Well tennis club has decided to invest $500000 for their portfolio in which they have allocated their investment in equity, debt money and market securities with considering the present and future market conditions so that the portfolios of club will be balanced in future (Campello and et. al., 2011). There are some conditions which have to consider by the managers for making investment in portfolios. They are as follows:

Current and future economic situations- during the construction of portfolio it is very essential for the investor to evaluate all the economic conditions such as inflation rate, GDP etc. at some time when the economy of a nation is moving from recession to recovery the investor have to make some strategies so that the portfolio can be adjusted accordingly (Petrova and et. al., 2011). Hence, it can be said that the evaluation of current and future economic situation is very important for the firm.

Government policies- Government have right to formulate the policies which can change the business environment of a specific nation. There are various kinds of policies such as stability in interest rates, regulations for economic growth, inflation rates etc. for example the interest rate is reduced it attract a large number of individuals towards investment (Capelle?Blancar and Monjon, 2012). For this, the managers of club have to make suitable strategies through which they will adjust their portfolio from this kind of changes.

Monetary conditions- The availability of funds gets affected from the monetary policy which includes the interest rates and exchange rates. During the formulation of investment policies for firm, managers have to consider monetary policy and its effect on their investment. With the help of it, the managers of club will make best portfolio mix.

The managers of Well tennis club have to formulate their strategies for portfolio mix and make the classification of securities such as equity and preference shares, debentures, bonds etc. so that the security analysis will be conducted in a proper manner (Chandra, 2011). There are various securities are existing in the market from which the portfolio manager have to select those securities that are suitable and perfect for their portfolio. For this, they have to make a proper evaluation of securities and decide for investment accordingly. A simple strategy of investing in securities is that the undervalued securities have to purchase by the investors and the overvalued securities has to sell. The managers of Wells tennis club have make an evaluation of various aspects such as:

  • Making the balance between the equities and the fixed interest securities.
  • The mangers has to manage the high dividend paying companies with those of high growth companies.
  • Also they have to manage the capital gain as well as income tax payable.
  • They also have to maintain the liquidity so as to bargain the amount of investment.
  • The growth portfolio investment plans also have to be ascertained by the club.

As it is known that the equities have a higher return but also have some high risk than what the debt market doesn’t have hence the Wells tennis club has to make a balance between them accordingly and has to decide the portfolio accordingly (Merna and Al-Thani, 2011). By analysing the portfolio investment proposal, the perfect balance has to be made between the portfolio mixes by the managers so that they are able to generate best profits to the investors. So the club will make the portfolio balance by investing the 40% investment in equity, 40% in debt and the balance 20% in the money market securities so that the risk that is involved in it can be avoided from the portfolio. So the amount of investment in shares is $500,000*40/100=$200,000 the amount of investment in debt is $500,000*40/100=$200,000 and the amount that is invested in money market is $500,000*20/100=$100,000.


Explanatory statement for choosing specific investment

From the above analysis it is seen that selecting the right kind of portfolio gives the best result so as to obtain the overall advantage in the coming period of time. It is considered as the best asset that will help the investors to examine their options before they make any decision. The reason behind selecting the scheme of the company is to invest the money in the shares so as to earn maximum long term profit from it (Chorafas, 2011). As it is seen from the above that the bonds as well as the other investment options are also one of the best tool that helps in creating maximum profits from investment. So it will be best decision for the investors to invest in the right option so that long term gains and capital profits can be achieved in the coming future years.

Capital distribution: this is the best system to distribute the financial sources in various sectors so as to increase the efficiency and to maximise the profits of the club. This helps the management and the accounts department to complete the goals of optimising the capital allocation which will help them in building the wealth for the stakeholders (MacLean, Thorp and Ziemba, 2011). It is considered as complicated process. The managers has to allocate the funds between equity, debt and money market so that it will generate best result from the resources in which it is distributed.

If the club has the diversified portfolio then it will help the investors in the club to invest in various types of securities. Also the diversified portfolio includes the different securities so that weightage of the security is done in a way that reduces the cost of overall portfolio and the risk that is associated to it (Pompian, 2011). The club which is having a well-diversified portfolio then it will generate good amount of funds and will also help the investors to have minimum risk associated with it.

Systematic Risk: this is considered as the variance in the returns that is generated from the security which is caused due to the change in the economic and market condition of the club. These changes affects the portfolio to the some extent (Duffie and Singleton, 2012). It can be measured by relating the variability of the stock market index and the variance that is caused to the security of the cub. It is measured through assessing Beta for the company.

Unsystematic risk: this is the risk that is considered as unique for the company and it relates to the specific company, this can also vary from one company to another company. This can be eliminated or reduced by combining two negative correlative securities.

Reduction or dilution of portfolio risk through diversification: It is done by combining one or more than one stock in the portfolio which is referred to as diversification. Well Tennis club has used the diversification so as to reduce the total risk by mitigating the unsystematic risk, without forgoing the return of the portfolio (Guo and Seaman, 2011). So for the company to understand the impact of variability on the portfolio risk they have to consider different cases:

  • Perfectly positive correlated
  • Perfectly negatively correlated
  • Returns are uncorrelated or independent

The portfolio managers of the company has to check and analyse the different investment that has to be done so the analysis of the different portfolio companies which are having investment in different sectors this includes,

Equity / Debt / Money Market Securities

Company Name


Amount Invested ($)

Purchase Price per share ($)


The a2 Milk Company (A2M)

Milk sector




Adelaide Brighton (ABC)

Real estate sector




AGL Energy Limited (AGL)


Energy Sector



 As the company has to purchase the debenture of around $200,000 as it has a fixed interest rate of 10% and the amount of money that has been invested in the securities which would be of amount 100,000$ in a treasury bill and commercial papers amounting to $50,000 which would be of short term flexibility (Fabozzi and Markowitz, 2011). The investment of the fund in the equity shares of different sector which includes milk sector, real estate sector and energy sector, debenture having a fixed interest rate of 10% and the market securities of a treasury bills and commercial papers which would make the Well tennis club a good diversified club.


Evaluation of performance of portfolio of Dendy Park Tennis Club

It is the report that contains the portfolio of Well tennis club, in this the investment policies are framed in a starting of the month of the year and after this the investment mix is decided in the middle of the month of December that is 40% is invested in shares also 40% is invested in debentures. Hence the investment in the various companies of different sectors and debentures and money market securities are made.

Presentation of the investment portfolio made by Well tennis club can be checked on a weekly base that starts from January 2019 to February 2019 on projected basis are as follows:


The a2 Milk Company (A2M)

Adelaide Brighton (ABC)

AGL Energy Limited (AGL)


Price per share ($)

Price per share ($)

Price per share ($)

1-7 January




8-14 January




15-21 January




22-28 January




29 January – 4 February




5-11 February




12-18 February




19-25 February




25 February -3 March






The Well Tennis Club have a continuous enactment in all the shares in its portfolio leaving The a2 Milk Company (A2M). As well as the company is shaving a  well-diversified portfolio, the fall in price of  A2 Milk Company (A2M) is paid off with the securities and debt since the value of debt is constant all through the period of January and February (Fernandes, 2011). The performance of the club is linked with its benchmark portfolios, also it is decided that the club's performance in its portfolio is steady.


From the above analysis it is concluded that portfolio management is necessary and this process includes selection, construction and the weights of securities of the portfolio. Portfolio should be well diversified and this will help in maximising the wealth of stakeholders. Also in the above report it is analysed that Well tennis club of UK is done which has $500,000 for its investment. 40% of the amount is invested in shares of A2 Milk Company (A2M) and various other companies. The performance of portfolio is also evaluated in last part of this project.



Abu Hussain, H. and Al-Ajmi, J., 2012. Risk management practices of conventional and Islamic banks in Bahrain. The Journal of Risk Finance. 13(3) pp.215-239.

Bayney, R. and Chakravarti, R., 2012. Enterprise Project portfolio Management: building competencies for R&D and IT investment success. J. Ross Publishing.

Bodie, Z., Kane, A. and Marcus, A.J., 2011. Investment and portfolio management. McGraw-Hill Irwin.

Campello, M., Giambona, E., Graham, J.R. and Harvey, C.R., 2011. Liquidity management and corporate investment during a financial crisis. The Review of Financial Studies. 24(6) pp.1944-1979.

Capelle?Blancard, G. and Monjon, S., 2012. Trends in the literature on socially responsible investment: Looking for the keys under the lamppost. Business ethics: a European review. 21(3) pp.239-250.

Chandra, P., 2011. Financial management. Tata McGraw-Hill Education.

Chorafas, D.N., 2011. Wealth management: Private banking, investment decisions, and structured financial products. Elsevier.

Duffie, D. and Singleton, K.J., 2012. Credit risk: pricing, measurement, and management. Princeton University Press.

Fabozzi, F.J. and Markowitz, H.M. eds., 2011. The theory and practice of investment management: Asset Allocation, Valuation, Portfolio Construction, and Strategies (Vol. 198). John Wiley & Sons.

Fernandes, N., 2011. Sovereign wealth funds: Investment choices and implications around the world.

Guo, Y. and Seaman, C., 2011, May. A portfolio approach to technical debt management. In Proceedings of the 2nd Workshop on Managing Technical Debt (pp. 31-34). ACM.

MacLean, L.C. Thorp, E.O. and Ziemba, W.T., 2011. The Kelly capital growth investment criterion: Theory and practice (Vol. 3). world scientific.

Merna, T. and Al-Thani, F.F., 2011. Corporate risk management. John Wiley & Sons.

Ozik, G. and Sadka, R., 2012. Media and investment management.

Parker, D., 2012. Global real estate investment trusts: People, process and management. John Wiley & Sons.

Petrova, I., Pihlman, J., Kunzel, M.P. and Lu, Y., 2011. Investment objectives of sovereign wealth funds: a shifting paradigm (No. 11-19). International Monetary Fund.

Pompian, M.M., 2011. Behavioral finance and wealth management: how to build investment strategies that account for investor biases (Vol. 667). John Wiley & Sons.


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