CORPFIN 3501 - Portfolio Theory & Management III

North Terrace Campus - Semester 1 - 2016

This course is an in-depth study of the funds management theory and practice. Participants will first develop a strong theoretical knowledge of asset pricing, market efficiency and funds management. Students will then be exposed to the managed funds industry and be required to apply their theoretical knowledge to understand the process of developing, managing and evaluating these assets. In addition, students will practically develop an Investment Policy Statement (or a Statement of Advice) for an investor, forecast characteristics of various asset classes in an economy, and be able to create an investment vehicle to satisfy investors' needs. The students will also learn various strategies to manage funds, issues that impact performance, and issues in benchmarking and performance evaluation. Equities, Fixed Income Securities, Commodities, Real Estate, Alternate Funds, Emerging, Developing and Developed markets will be examined in the context of portfolio construction.

  • General Course Information
    Course Details
    Course Code CORPFIN 3501
    Course Portfolio Theory & Management III
    Coordinating Unit Business School
    Term Semester 1
    Level Undergraduate
    Location/s North Terrace Campus
    Units 3
    Contact Up to 3 hours per week
    Available for Study Abroad and Exchange Y
    Prerequisites CORPFIN 2500
    Assumed Knowledge SACE Stage 2 Mathematical Studies
    Course Description This course is an in-depth study of the funds management theory and practice. Participants will first develop a strong theoretical knowledge of asset pricing, market efficiency and funds management. Students will then be exposed to the managed funds industry and be required to apply their theoretical knowledge to understand the process of developing, managing and evaluating these assets. In addition, students will practically develop an Investment Policy Statement (or a Statement of Advice) for an investor, forecast characteristics of various asset classes in an economy, and be able to create an investment vehicle to satisfy investors' needs. The students will also learn various strategies to manage funds, issues that impact performance, and issues in benchmarking and performance evaluation. Equities, Fixed Income Securities, Commodities, Real Estate, Alternate Funds, Emerging, Developing and Developed markets will be examined in the context of portfolio construction.
    Course Staff

    Course Coordinator: Dr Syed Zamin Ali

    Course Timetable

    The full timetable of all activities for this course can be accessed from Course Planner.

  • Learning Outcomes
    Course Learning Outcomes
    The main objective of this course is to have a deep understanding of the Theory and Practice of Portfolio construction and its
    implementation. This course is designed to cover the topic "Portfolio Management and Wealth Planning" of the CFA Program Candidate Body of Knowledge (CBOK).

    This course draws upon participant’s knowledge of Capital Asset Pricing Model (CAPM), and Valuation models for Equities and Fixed Income Securities gained from Business Valuation II and/or Financial Economics II (or equivalent courses). Course participants will also call upon their skills in statistics and Ordinary Least Square (OLS) regression analyses gained in Intermediate Econometrics II (or an equivalent course).

    Course participants will first be introduced to the Modern Portfolio Theory (MPT) and the Markowitz Efficient Frontier to gain the necessary theoretical foundations for this course. Students will then learn how to profile an investor's investment needs and objectives, as well as their investment constraints. The course will then guide the student cohort to construct portfolios appropriate for institutional (and retail) investors by investing in Core asset classes (Equities and Fixed Income securities) in the international capital markets and Alternative investments (Real Estate, Private Equity and Venture Capital funds, Hedge funds and Commodities). The last part of the
    course deals with operational issues that revolve around managing portfolios that include trading costs and performance measurements as well as the ethical and regulatory framework for the investment industry.

    Graduates from this course are motivated to enter the Funds Management and the Financial Advisory industry both in Australia and overseas. At the very least, this course will help in making wise financial investment decisions for specific purposes such as retirement planning. Students graduating from this course should also consider acquiring the Chartered Financial Analyst qualification.

    On successful completion of this course, students are expected to be able to:

    1. Understand the framework of the Modern Portfolio Theory and the Mean-Variance Framework.

    2. Formulate expectation of performance of Core asset classes based on their characteristics and their linkages with the economic and business cycles.

    3. Understand the characteristics of Alternative Investments, and their relationship with Core asset classes, in a portfolio context.

    4. Understand Active and Passive investment strategies, and their associate benefits and costs.

    5. Evaluate any existing (or proposed) investment using both quantitative and qualitative methodologies.

    6. Create investment vehicles for specific client needs that are consistent with ethical and regulatory framework of the Investment Industry.


    University Graduate Attributes

    This course will provide students with an opportunity to develop the Graduate Attribute(s) specified below:

    University Graduate Attribute Course Learning Outcome(s)
    Deep discipline knowledge
    • informed and infused by cutting edge research, scaffolded throughout their program of studies
    • acquired from personal interaction with research active educators, from year 1
    • accredited or validated against national or international standards (for relevant programs)
    All
    Critical thinking and problem solving
    • steeped in research methods and rigor
    • based on empirical evidence and the scientific approach to knowledge development
    • demonstrated through appropriate and relevant assessment
    All
    Teamwork and communication skills
    • developed from, with, and via the SGDE
    • honed through assessment and practice throughout the program of studies
    • encouraged and valued in all aspects of learning
    All
    Career and leadership readiness
    • technology savvy
    • professional and, where relevant, fully accredited
    • forward thinking and well informed
    • tested and validated by work based experiences
    All
    Intercultural and ethical competency
    • adept at operating in other cultures
    • comfortable with different nationalities and social contexts
    • Able to determine and contribute to desirable social outcomes
    • demonstrated by study abroad or with an understanding of indigenous knowledges
    All
    Self-awareness and emotional intelligence
    • a capacity for self-reflection and a willingness to engage in self-appraisal
    • open to objective and constructive feedback from supervisors and peers
    • able to negotiate difficult social situations, defuse conflict and engage positively in purposeful debate
    All
  • Learning Resources
    Required Resources
    Running Money: Professional Portfolio Management
    by Stewart, S. D., Prios, C. D., and  J. C. Heisler, 1st Edition, published by McGraw-Hill

    Other readings from academic, semi-professional and professional sources.
    Recommended Resources

    Students are encouraged to stay abreast of global financial issues. The Australian Financial Review and finance commentary on the ABC network are an excellent source of current financial news and should be referred to on a regular basis. The internet is also abundantly populated with all aspects of this course, and should be used as well.

    Online Learning

    Discussion board will be the primary source of interface between students and the academic staff.

    Lecture material such as presentation, articles, tutorial questions and lecture recording will be available on MyUni.

  • Learning & Teaching Activities
    Learning & Teaching Modes
    The approach in this course is to first establish the theoretical foundations and then to build upon these to understand portfolio construction, implementation and management for an investor. This will be done through lectures, tutorials, a test, individual and group assignment, and a final examination.

    This course will also feature Small Group Discovery Experience (SGDE) within tutorials to help enrich students' learning and research experience.
    Workload

    The information below is provided as a guide to assist students in engaging appropriately with the course requirements.

    The University expects full-time students (i.e. those taking 12 units per semester) to devote a total of 48 hours per week to their studies. This means that you are expected to commit approximately 9 hours for a three-unit course or 13 hours for a four-unit course, of private study outside of your regular classes.

    Students in this course are expected to attend all lectures throughout the semester plus one tutorial class each week.
    Learning Activities Summary


    Week 1: Introduction

    Week 2: Client Objectives for Diversified Portfolios

    Week 3: Introduction to Asset Allocation - The Mean Variance Framework

    Week 4: Equity Portfolio Investing

    Week 5: Fixed Income Management

    Week 6: The Investment Management process

    Week 7: Global Investing

    Week 8: Asset Allocation - Revisited

    Week 9: Alternative Investment Classes

    Week 10: Portfolio Management through Time

    Week 11: Performance Measurement

    Week 12: Investor and Client Behaviour

    Small Group Discovery Experience
    This course features Small Group Discovery Experience. Each student group, guided by their tutors and the lecturer, will create a rigorously tested portfolio for an institutional endowment fund. The group, consisting of 4 students (maximum), will apply their knowledge gained from the first part of the course (weeks 1-6) to embark on the SGDE over the following 5 weeks (weeks 7-11).
    Each group will select an Endowment Fund for a US University that has its current (not earlier than 2014) Investment Policy Statement (IPS) available online.
     
    The SGDE will lead the cohort through the following 5 steps:
    1.      Define the Endowment’s investment Objectives and Constraints.
    2.      Stress-test the current asset allocation for Endowment Fund using appropriate index benchmarks, and provide a critique of the asset allocation based on the investment objectives of the Endowment.
    3.      Research one Alternative Investment (Real Estate Investment Trusts, Hedge Funds, Commodities, Private Equity Funds, and Venture Capital Funds) in terms of its risk and return characteristics, as well as its relationship with the core asset classes (Equities and Fixed Income Securities). This Alternative Investment will play an important role for the next step.
    4.      Use the Mean Variance (MV) framework to create a new asset allocation using ONLY core asset classes and the Alternative Investments (researched in step 3 above) for the Endowment Fund using only historical index data (will be provided).
    5.      Provide recommendations to the Board regarding any changes to the asset allocation
     
    Each group is required to hold regular consult with tutor(s) and lecturer during weeks 7-11, submit periodic individual mini-report to update their progress, and submit a final group report. Further details will be provided on MyUni. 
  • Assessment

    The University's policy on Assessment for Coursework Programs is based on the following four principles:

    1. Assessment must encourage and reinforce learning.
    2. Assessment must enable robust and fair judgements about student performance.
    3. Assessment practices must be fair and equitable to students and give them the opportunity to demonstrate what they have learned.
    4. Assessment must maintain academic standards.

    Assessment Summary
    This course has 4 assessment components:
    1. Test worth 20%
    2. Individual SGDE related submissions worth 10%
    3. Group Assignment worth 20%
    4. Final Examination worth 50%

    Assessment Related Requirements
    Tests and Final/Replacement examination will be closed book (no reference material allowed).

    Assessments from previous semester(s) cannot be redeemed.
    Assessment Detail
    The assessment components are as follows:

    · (20%) Test: 50 minute test. Multiple Choice Questions. This is a closed book test

    · (10%) SGDE related Individual Submissions 

    . (20%) SGDE related Group assignment

    · (50%) Final/Replacement Exam: 3 hours exam as per examination schedule. These are closed book examination
    Submission

    No information currently available.

    Course Grading

    Grades for your performance in this course will be awarded in accordance with the following scheme:

    M10 (Coursework Mark Scheme)
    Grade Mark Description
    FNS   Fail No Submission
    F 1-49 Fail
    P 50-64 Pass
    C 65-74 Credit
    D 75-84 Distinction
    HD 85-100 High Distinction
    CN   Continuing
    NFE   No Formal Examination
    RP   Result Pending

    Further details of the grades/results can be obtained from Examinations.

    Grade Descriptors are available which provide a general guide to the standard of work that is expected at each grade level. More information at Assessment for Coursework Programs.

    Final results for this course will be made available through Access Adelaide.

  • Student Feedback

    The University places a high priority on approaches to learning and teaching that enhance the student experience. Feedback is sought from students in a variety of ways including on-going engagement with staff, the use of online discussion boards and the use of Student Experience of Learning and Teaching (SELT) surveys as well as GOS surveys and Program reviews.

    SELTs are an important source of information to inform individual teaching practice, decisions about teaching duties, and course and program curriculum design. They enable the University to assess how effectively its learning environments and teaching practices facilitate student engagement and learning outcomes. Under the current SELT Policy (http://www.adelaide.edu.au/policies/101/) course SELTs are mandated and must be conducted at the conclusion of each term/semester/trimester for every course offering. Feedback on issues raised through course SELT surveys is made available to enrolled students through various resources (e.g. MyUni). In addition aggregated course SELT data is available.

  • Student Support
  • Policies & Guidelines
  • Fraud Awareness

    Students are reminded that in order to maintain the academic integrity of all programs and courses, the university has a zero-tolerance approach to students offering money or significant value goods or services to any staff member who is involved in their teaching or assessment. Students offering lecturers or tutors or professional staff anything more than a small token of appreciation is totally unacceptable, in any circumstances. Staff members are obliged to report all such incidents to their supervisor/manager, who will refer them for action under the university's student’s disciplinary procedures.

The University of Adelaide is committed to regular reviews of the courses and programs it offers to students. The University of Adelaide therefore reserves the right to discontinue or vary programs and courses without notice. Please read the important information contained in the disclaimer.