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MANG6221 Investment Project
In this investment project, you act as a portfolio manager. You should help your clients achieve their
investment objectives. Please read the sections below carefully for details on the rules and constraints
that you should follow to manage your clients’ portfolio, the investment plan and deadlines, and the
criteria for performance evaluation.
Please note that the project is for training purpose only. The portfolio will be executed in a simulated
investment account with virtual money. No real money is involved.
1. Project Overview and Objectives
You work as a portfolio manager at Southampton Asset Management Group PLC. One of your clients
has recently become concerned about the impact of climate change after reading a report published
in March 2023 by the Intergovernmental Panel on Climate Change (IPCC). The client has decided to
invest part of her money in a stock portfolio that contributes to combating climate change and global
warming. The client entrusted you with $100,000 to invest in a stock portfolio that is aligned with a
1.5°C climate scenario and contributes to reducing the overall greenhouse gas emissions.
2. Investment Policy Statement (IPS)
Following the meeting with your client you have agreed an investment policy statement with them in
which you assessed their risk tolerance to be average. You also agreed that the appropriate benchmark
of the portfolio should be the S&P 500 Net Zero 2050 Climate Transition ESG Index. The return
objective is set equal to the holding period return on the benchmark. The investment horizon is six
weeks. The client has no specific liquidity, regulatory or tax constraints.
3. Portfolio Management Rules and Constraints
Capital available for investment is $100,000.
You must invest in stocks only. Investing in ETFs or Funds is not allowed.
The portfolio must only consist of stocks traded in the US stock market and included in the
S&P 500 Net Zero 2050 Climate Transition ESG Index as of 30/09/2023.
The portfolio must include exactly 10 stocks.
The portfolio must meet the environmental, social, and governance (ESG) characteristics of
the benchmark index.
The initial position in any stock must be between -25% and +25% of the portfolio
initial capital.
Cash must not exceed 10% of your portfolio at any time.
Margin trading is allowed; short selling is allowed.
You must make at least 10 buy and/or sell orders.
You must use each type of the market, limit, and stop orders at least once.
Transaction cost is $10 per transaction.
Debt interest rate for leverage is 5%. Interest earned on cash is 1%.
No fund withdrawals or additions are allowed during the investment period.
You must construct and manage your portfolio live on the specified trading platform.
MANG6221 Investment Project
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4. The Investment Plan and Deadlines
Dates Tasks and Deadlines
1 November 2023 Registration Period [ 4 weeks]
The investment project will be completed on the HowTheMarketWorks.com trading platform.
Registration opens four weeks before trading begins. To set up your account, go to
https://app.howthemarketworks.com/register/289415
Important information:
Contest: MANG6221_SMA_InvestmentProject_htmw_23/24
Password: MSA_IP@23
Registration is free. Make sure to use your full name and university email address to register and
create your investment account.
From
1 November 2023
To
3 December 2023
Preparation Period [4 weeks]
You should complete the following tasks during the preparation period:
1. Getting Started. Please read the “Student User Guide” to familiarize yourself with the
trading platform and get guidance on how to manage your portfolio before trading begins:
Click here! or use this direct link:
https://app.howthemarketworks.com/trading/tradingvideos category=Managing_portfolio
_content&content=Managing-Portfolio&title=ManagePortfolio
You can also watch these tutorial videos to get information about basic trading and
managing your portfolio on the trading platform: Click here! or use this direct link:
https://www.howthemarketworks.com/the-official-htmw-user-guide/
2. Macroeconomic and Industry Analysis. You need to study the macroeconomic and
industry conditions and developments that underline your stock portfolio. This
corresponds to Part 2 of the project report.
3. Security Selection. You need to identify the stocks to be included in your portfolio. Please
see the data sources listed below and further guidance provided on the Blackboard. This
corresponds to Part 3 of the project report.
4. Portfolio Optimization. You will need to optimize your portfolio allocation to identify the
optimal allocation to the stocks that will be included in your portfolio. This corresponds to
Part 4 of the project report.
5. Portfolio Management Strategy. You need to figure out a strategy (active vs passive) that
you can follow to manage your stock portfolio. This corresponds to Part 5 of the project
report.
4 December 2023 Deadline to create your investment account on the trading platform
From
4 December 2023
To
29 December 2023
Investment Period [4 weeks]
You should complete the following tasks during the investment period:
1- Portfolio Construction. Your portfolio will become live and actual trading starts on
the trading platform. Follow the portfolio management rules and constraints to build
your portfolio. This corresponds to Part 5 of the project report.
2- Portfolio Rebalancing. You might need to rebalance your portfolio. Follow the portfolio
management rules and constraints to rebalance your portfolio. This corresponds to Part
5 of the project report.
3- Trading requirements. You will need to meet the requirements of the
“Minimum Trading Activity” assignment on the trading platform. This
corresponds to Part 5 of the project report.
29 December 2023 Deadline to complete trading on the trading platform
From
30 December 2023
To
7 January 2024
Performance Evaluation and Reflection Period [2 weeks]
1- Evaluate the performance of your stock portfolio including performance
measurement, performance attribution, and performance appraisal. This corresponds
to Part 6 of the project report.
2- Reflect on the investment project. This corresponds to Part 6 of the project report.
7 January 2024 Deadline to complete the Investment Project
(This is not the coursework submission deadline. Please check the coursework brief for the
exact date and time of the coursework submission deadline.)
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5. Performance Evaluation
Your clients expect you to invest their money prudently to help them achieve their investment
objectives. At the end of the investment period, if your clients are satisfied with your performance managing
their portfolio, they will extend their business with you, otherwise, they will consider other asset managers.
Specifically, your portfolio performance will be evaluated based on the following criteria:
i. ESG criteria: The portfolio must meet the ESG characteristics of the benchmark index.
ii. Performance measurement: Absolute return as measured by the total dollar increase in the
portfolio over the trading period.
iii. Performance attribution: To assess your skills, clients are interested in a performance attribution
of your portfolio returns
iv. Performance appraisal: Risk-adjusted return as measured by the return on the portfolio taking into
account the level of risk assumed by you, using different performance appraisal measures (e.g.
Sharpe Ratio).
6. Sources of Data
Sources that you may find to be particularly valuable for your stock analysis include:
The HTMW: https://Howthemarketworks.com/
MarketWatch: http://www.marketwatch.com/
Yahoo Finance: finance.yahoo.com
Refinitiv: Datastream, Eikon, Workspace (check the library website:
https://library.soton.ac.uk/tutorials/datastream )
Bloomberg: https://sotonac.sharepoint.com/teams/finlab
Wall Street Journal: http://www.wsj.com
The Financial Times: https://www.ft.com/
WRDS (check the library website: https://library.soton.ac.uk/tutorials/wrds