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Conservative Consulting ltd - Proposal and investment Plan, conservative consulting's investment proposal for Mr roberts.

Extracts from this document...

Introduction

CONSERVATIVE CONSULTING LTD PROPOSAL AND INVESTMENT PLAN CONSERVATIVE CONSULTING'S INVESTMENT PROPOSAL FOR MR ROBERTS EXECUTIVE SUMMARY Conservative Consulting Ltd is a leading provider of customised management and investment-consulting services utilising accomplished investment and business executives. We bring experience in building successful million pound plus asset management portfolios. Our aim is to help clients identify and implement key strategic initiatives, investment services/policies, tax efficient and socially responsible investments to help them increase sales/assets, income, profitability and personal satisfaction. With decades of management experience in all aspects of investments and business disciplines we work beside you to provide timely execution, customised solutions, follow-through, honesty and integrity. Our responsibility is to you. Conservative Consulting Ltd does not manage money or transact securities so we are not in competition with you. HAVE OUR EXPERIENCE AND SUCCESSES IN INVESTMENT AND MANAGEMENT WORK FOR YOU. CONTENTS PROPOSAL AND INVESTMENT PLAN CONSERVATIVE CONSULTING'S INVESTMENT PROPOSAL FOR MR ROBERTS INTRODUCTION 1.1. PORTFOLIO CLIENT This portfolio has been produced for Mr. Roberts, a university professor at the University of Nottingham who approached Conservative consulting with the aim for us to invest a sum of �300,000 that he has recently inherited. 1.2. CONSERVATIVE CONSULTING'S FINANCIAL AIM Conservative consulting is an experienced, mature company. Acting not only as Mr. Robert's financial advisers, providing a full investment portfolio for the investment of his inheritance we at Conservative consulting considers all our clients to be a member of the firm and hence we aim to provide friendly, financial advice on all Mr. Roberts money matters. All of our clients have a direct link to their investment portfolio via the Internet and can monitor its progress. Our portfolios are always very factual detailing every aspect of the portfolio process. We also provide extra background, and relevant information concerning the recent trends in markets and the theoretical models on which we at conservative consulting design our portfolios Specifically, Mr. ...read more.

Middle

The firm's objectives focus on long term goals by having balanced portfolios through diversified portfolios. To ensure consistent performance, management normally keeps duration within a moderate range and utilizes all major sectors of the fixed-income market. ii) It is also important to pick not only the investing firm, but also the portfolio manager. This is the job of bill gross, one of the best known and most respected fixed-income managers in America today. iii) This portfolio is suited to Mr. Roberts' situation as the average maturity of the fund is between five and ten years, which makes it an excellent choice for investors looking for income and lower risk of principal. iv) The portfolio invests in a wide range of bond securities including mortgage-backed securities, u.s. treasury bonds, international bonds, and corporate bonds. v) The bond has also outperformed the Lehman brothers aggregate bond index for investment periods of 5 years or more, backing up claims of the company objective of long term vision The weighted average coupon for the fund = 3.73% (after annual operating expenses) Maturity, portfolio average = 8.37years Credit quality, portfolio average = aaa The top five holdings for this fund are as follows: Security Duration weighted exposure 1. 10-yr u.s. long bond futures, 2,253 contracts, exp. 22.4% 2. 5-yr Euro dollar futures, 1,473 contracts, exp. 13.7% 3. Euribor lif futures, 383 contracts, exp. 7.9% 4. 10-yr Euro-bond futures, 746 contracts, exp. 7.1% 5. FNMA TBA 6.1% Total 57.2% STATE FARM BOND FUND (SFBAX, CLASS A) We have decided to invest �6000 in this fund. This fund (worth $41.5m), unlike the Fremont fund, has a larger element of risk attached. It suits an investor seeking higher potential returns than money market funds and willing to accept the price volatility of bonds with longer maturities. However, the firm has retirement plans set-up so it's not exclusively a high-risk investor. Even though this is not the in the criteria set down by Mr. ...read more.

Conclusion

The normal annual contribution to the scheme is 6.35% of salary and the University also pay into the scheme. The scheme operates on a pensionable salary basis and Mr Roberts pensionable salary will be at least �50 000 (see appendix). Assuming Mr Roberts retires at the normal age (65) he will receive pension for life at the annual rate of 1/80th of pensionable salary for each year of pensionable service. He will also receive a lump-sum payment of 3/80ths pensionable salary for each year of pensionable service. Hence based on a salary of �50 000 and 40 years service, he will receive a lump sum of �75 000 and an annual payment of �25 000. Mr Roberts must purchase an annuity using his pension fund by the time he is 75, and the return from this annuity will be at least equal to the minimum guaranteed pension provided by the scheme. Mrs Roberts could invest in a separate pension scheme such as a stakeholder scheme offered by banks like HSBC. However personal pensions are not performing at all well at the moment and a higher return could be earned for the Roberts' by investing elsewhere. Also in the event of Mr Roberts' death there is a provision in the USS scheme for Mrs Roberts to receive around �12 500. Mr Roberts could increase the final value of his pension fund by increasing his contributions into the fund to the maximum amount allowed by the Inland Revenue of 15% salary. To do this he would have to purchase Additional Voluntary Contributions (AVCs) from an insurance company such as Legal & General or Scottish Life. It has been decided that because of the complexities of the AVC plans and the fact that no contribution is made towards AVCs by the University Mr Roberts' money would be better invested somewhere else. APPENDIX Pensionable salary is the highest of either: a) Highest salary maintained for 12 months earned during the three years before retirement. b) Highest yearly average for any three consecutive years not earlier than 10 years before retirement. ...read more.

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