In this project I constructed a model which allows to divide the porpotion of budget into an international portfolio.
Portfolio Construction is all about investing in a range of funds that work together to create an investment solution for investors. Building a portfolio involves understanding the way various types of investments work, and combining them to address your personal investment objectives and factors such as attitude to risk the investment and the expected life of the investment.
When building an investment portfolio there are two very important considerations.
The first is asset allocation, which is concerned with how an investment is spread across different asset types and regions. The second is fund selection, which is concerned with the choice of fund managers and funds to represent each of the chosen asset classes and sectors. Both of these considerations are important, although academic studies have consistently shown that in the medium to long term, asset allocation usually has a much larger impact on the variability of a portfolio’s return.
To help in choosing a suitable asset allocation we have created a Risk Profiler that helps identify your attitude to risk and therefore better identify a combination of investments to build a portfolio. Therefore using CAPM and FF model, we accounted for both risk and returns and then tried to construct an international portfolio,