FIN300 Finance portfolio management

Dr Calvin, 50 years old, is a businessman who owns two businesses either on his own or with partners. The estimated value of his assets in real estate development and medical product manufacturing are S$30 million and S$20 million respectively. He has a wife who is a homemaker and three children with two studying in university and one is still in high school.

Their two daughters are studying medicine in the U.S. and the U.K., while his youngest son is studying in a prestigious high school in California and aspires to be a technological entrepreneur.

In addition to the value of the businesses, the family has about S$30m in bonds, bank fixed deposits and annuity products. The family’s total assets, excluding their main residence is about S$80m.

Calvin has become concerned and is keen to better plan his retirement in about ten years. He has become especially concerned about the low rates of returns from his bonds, deposits and annuity products. He has heard about the core-satellite approach to investing and wishes to keep bonds and fixed deposits as a core, while investing actively in other asset classes that include equity and equity-linked products as the satellites. He thinks that he should invest aboutUS$10 million in a global equity portfolio but is concerned about investment and currency risks.

Q1. The family needs you to examine his investment objectives and constraints and to prepare a one-page Investment Policy Statement.