GLOBAL INVESTMENT

Global Investment Allocation

Global Investment Allocation

Abstract

Investment decisions can be determined by a range of factors, which involves the control of portfolio managers and it is further, determined by the anticipation of the portfolio manager. Modern Portfolio theory was introduced by Markowitz (1959), and many researchers have worked on the theory to establish diversification strategies for portfolio management. MPT is applicable on stocks, options, bonds and future rather than property investments such as corporate investments projects or real estate properties. The work is focused on potential gains, which combines various stocks into single portfolio and it can be extended to currencies, real estate, international stocks and bonds. The paper identifies four funds for international property investment and explains the investment objectives, investment strategies constraints of the funds selected, risks and return objectives and asset allocation considerations. The paper examines the process of global asset allocation and global performance evaluation using MPT theory.

Part I: Proposal for Investment

Introduction/background

MPT provides the breakthrough in research and has great impact on investment management strategies. Diversification is the main issue handled by MPT, which has been accepted as the tool to manage real estate portfolio. Real estate investments carry specified risks, which are more important as before. MPT is used in real estate analysis, and it constraints researches related to suitability and application to the allocated property portfolio (Friedman, 1971; Draper and Findlay, 1982). Real estate investments are, sometimes, misjudged which has driven the institutional investors to stay away from real estate, and the portfolio managers are not very confident of real estate and property market. Stock and bond markets deal with investment management tools, in daily transaction. They provide cyclical movement in value. The understanding of MPT has been improving from time to time and it is further improving along with suggestions and assumptions. Studies have found the portfolio management or sector allocation can be made by analysing different real estate types and examining the geographical differences (Geurts and Nolan, 1997; Pagliari et. al., 1995).

In the paper, thirty - nine REITs from 9 markets have been selected in a file and companies from two different markets have been selected for portfolio construction.

The estimate total capital of fund is AUD$300 million.

The four companies selected are:

Investa Office Fund (It encompasses both active and passive development of properties. The fund has allocation up to 20% of the gross assets. It is an open ended wholesale fund which has two yearly limited liquidity facilities )

GPT groups (it supports internal active and external passive. The fund is divided as 70% equities and 30% debt)

Simon PR. Groups is from US markets.

Public Storage is also US base.

Investment Summary

The estimate total capital of fund is AUD$300 million. The total capital of fund is AUD$300 million can be divided in the following manner:

Investa Office Fund - 120 million AUD

Public storage - 75 million AUD

Simon PR. Groups - 75 million AUD

GPT groups - 30 million AUD

Simon PR. Groups and Public Storage is US based fund and it will ...