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Investment Portfolio - Shares and other investments

Extracts from this document...

Introduction

Commerce Assignment By Ben Fitzpatrick Gordon Von Gecko Dear Mr Von Gecko, I am pleased to inform you of the progress of your investment portfolio. As you know, 1 month ago, 22 January, I made the purchase of 4 different types of shares on your behalf, in a range of industry groups. Your $100 000 has been invested in the share market for one month now and in this report I will detail the performance of all of the shares, which you will be pleased to know is all positive. The four shares that were purchased were in Babcock & Brown, Woodside Petroleum, Fortescue Metals Group and Flight Centre. Reasons for purchase There are several reasons for the purchase of each of the shares in companies that have bought as part of your investment portfolio. The money has been spread evenly over several industry groups, to minimise losses if one industry sector falls rapidly e.g. a cyclone wipes out mining in Western Australia. However, mining and oil have been travelling much more positively than other industry sectors in the sharemarket. For this reason a decision was made to invest in both the mining of minerals, through buying in Fortescue, and the exploration and production of oil and gas, in the course of purchasing shares in Woodside Petroleum. Helping these shares is the fact that there has been a resource boom as of late, due to increasing demand from Asia and other developing countries. Along with these investments, smaller amounts of money was used to invest in other areas in the share market, by procuring shares in Babcock and Brown, dubbed "mini Macquarie", in reference to their similarity to Macquarie Group, an extremely successful company, and by also buying shares in Flight Centre, based more on the need to diversify more than anything else, and because this share had the potential, having lost 27% of its share price in the fortnight leading up to purchase, to rebound and go back up quickly. ...read more.

Middle

This caused the share to drop 1.21%, or $0.56. #2 The 12th of Feb saw Woodside Petroleum adding to its interests in a number of North West Shelf oil fields in Western Australia for almost $US400 million - purchasing the interest in Cossack, Wanaea, Lambert and Hermes oil fields, the Cossack Pioneer production facility and the Egret oil discovery as well as some other exploration areas near Cossack Pioneer off Shell, which owns a large part of Woodside. This acquisition helped the share price of WPL to climb 5.42%. OVERALL With a rise of 27.5%, WPL was the second-best performing share, and also rose the highest amount of points. Though the first two weeks were shaky, after that Woodside rose 30% from the 11th February, due to a string of positive announcements and acquisitions of other companies. Fortescue Fortescue Metals Group Fortescue Metals Group Ltd (formerly Allied Mining & Processing Limited) is an iron ore development company with the assets located in Western Australia. Fortescue are currently focused on the development of the Pilbara Iron Ore and Infrastructure Projects. Fortescue Metals is led by entrepreneur Andrew Forrest of previous Anaconda Nickel fame. Fortescue had a market capitalisation of $17.1 billion as of 15 November 2007. Fortescue, along with Woodside Petroleum, was invested in more strongly in than the other two shares, Flight Centre and Babcock & Brown. Rather than buying a total worth of shares of $20 000, as had been done with these two shares, $30 000 was used to buy shares in Fortescue, as was done in the purchase of Woodside shares. Fortescue was a risky share to put money into, though profit was eventually made. TABLE Date FMG Change +/- Change % All Ords Change +/- Change % 26-Feb-08 8.22 0.27 3.40% 5745.8 46 0.81% 25-Feb-08 7.95 0.45 6.00% 5699.8 55 0.98% 22-Feb-08 7.5 -0.04 -0.53% 5644.5 -19 -0.33% 21-Feb-08 7.54 0.49 6.95% 5663 86 1.54% 20-Feb-08 7.05 -0.4 -5.37% 5577.3 -111 -1.96% 19-Feb-08 7.45 -0.07 -0.93% 5688.6 55 0.97% 18-Feb-08 ...read more.

Conclusion

At the end of the term deposit, a capital gain should be made of $10 890.72, which is quite a large sum of money. Bank Bills Bank bills, along with the managed fund, will be the largest part of your investment - that is, the most money will be put into it, as it provides a quick turnaround of profit, with little to no risk. Bank bills usually provide a profit of around 10%, so, on an investment of $87 500, a profit of at least $5 000 should be made, in only six months. If this is to be repeated, then a good profit could be made on this altogether over the next few years. Below is a pie graph of how your money will be spread among various investments. Following is a table summarizing projected returns over the next five years. Unfortunately, due to the volatility of the sharemarket, and the fact that a managed fund is not controlled, there is no way to estimate the returns on these two investments. MANAGED FUND Time frame Return 1 year unable to predict due to lack of control over investment 2 year unable to predict due to lack of control over investment 3 year unable to predict due to lack of control over investment 4 year unable to predict due to lack of control over investment 5 year unable to predict due to lack of control over investment SHARES Time frame Return 1 year unable to predict due to volatility of sharemarket 2 year unable to predict due to volatility of sharemarket 3 year unable to predict due to volatility of sharemarket 4 year unable to predict due to volatility of sharemarket 5 year unable to predict due to volatility of sharemarket BANK BILLS Time frame Return 1 year roughly $16000 2 year roughly $35000 3 year roughly $56000 4 year roughly $78000 5 year roughly $100000 TERM DEPOSIT Time frame Return 1 year $1,875 2 year $3,890.63 3 year $6,057.42 4 year $8,386.72 5 year $10,890. ...read more.

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