Faculty of Business and Law Sydney Business School
FIN954 Alternative Investments – Assignment
Background: Alternative investments can help diversify and complement traditional equity portfolios
by seeking returns that are independent from equity market and reducing overall sensitivity to
traditional markets. Assuming that you have held a portfolio with combination of S&P/ASX200 index
Exchange Traded Fund (ETF) and at least one alternative investment asset class since January 2021,
and your goal of adding the alternative investment asset class to your equity portfolio is to further
improve diversification of your portfolio. The portfolio evaluation is due by Quarter 1 2023, so it is
about the time to begin the evaluation on diversification of your portfolio between the period of
January 2021 to December 2022.
Preliminary Information and requirements:
You will prepare a report on a hypothetical portfolio which you had managed in from January 2021 to
December 2022. As this report is to be completed in hindsight, final evaluation results will not be
critical marking criterion. Marking will centre on your abilities to explain and justify your alternative
asset/assets selection and portfolio construction decisions that were made prior to January 2021, and
evaluate annual diversification and performance of the hypothetical portfolio over the 2 years period.
For simplicity, you can use an annual interest rate of 2% (risk-free rate) over the given year for all
relevant calculations if it is needed for the analysis. Historical stock market data and alternative
investment data must be collected from reliable sources, such as DatAnalysis, Refinitiv, Yahoo
Finance, Datastream and/or other finance databases.
Section Marks Summary
Abstract /10  A brief overview of the report
Introduction /20  Explain how to achieve the portfolio goal and whether the goal is
achieved over the two years period.
 Explain possible alternative asset classes which can potentially help
you to achieve your diversification goal. Discuss the advantages and
disadvantages of the alternative asset classes and further discuss which
alternative asset class/classes is/are appropriate to help you to achieve
the goal. Hint: Is the data available for the alternative asset class?
How liquid is the alternative asset class?
Research /25  Analyse mean variance (or standard deviation) trade-offs for
S&P/ASX200 index and the alternative investment asset/assets using
the data available prior to January 2021. Explain your findings with an
emphasis on risk-return trade-off.
 Calculate correlation coefficient for S&P/ASX200 index and the
alternative investment asset/assets. Explain your findings.
 Construct your portfolio for the start date based on your analysis
results, and explain your asset allocation decision. Hint: you need to
choose the alternative asset/assets for your portfolio and add it/them to
your equity portfolio by assigning weight/weights to it/them.
Portfolio
management
and
performance
evaluation
/30  Evaluate annual performance of your portfolio over the 2 years holding
period and discuss:
o Risk-return trade-off of your portfolio
 Discuss implications of your portfolio performance and diversification
evaluation results. Hint: Did your portfolio achieve the portfolio goal
in 2021 and 2022? Were there any changes in the risk-return trade-off
over the two years period? Are results different compared to your
expectations?
Conclusion /10  Summarise all major sections within the document
 Conclude the overall diversification and performance of your portfolio
References /5  UOW Harvard style referencing
 Websites and databases where the data was sourced for stocks,
companies, sectors, economic indicators etc
TOTAL 100