I am a Mutual fund manager working in a very successful investment company, I build and construct portfolio for investors based on their risk tolerance and expected returns. A retail investor has approached me so I can build him his portfolio, he is relatively cautious since his expected returns per year is 3.5% which makes him not an adventurous investor, this means that the portfolio I construct has to be well diversified with a variety of different types of funds and I have to keep the risk at a particularly low level. The initial capital outlay provided by the investor is $500,000 and he/she wants at least six funds in his/her portfolio. In this paper, I will be identifying the 6 funds I have chosen while explaining why I chose each fund, what are the expected returns from each fund, and why I chose to allocate these amounts into each fund. The Funds I have Chosen: 1- SPDR® S&P 500® ESG ETF An ETF (Exchange-Traded Fund) operates like a mutual fund in the fact that it has multiple investment securities in it. Regularly, ETFs can include different types of investments such as stocks, bonds, and commodities. The main difference between an ETF and a mutual fund is that ETFs can be traded like stocks (throughout the day) which causes the ETFs prices to fluctuate throughout the day, on the other hand, mutual funds are traded once a day at market close. For this Portfolio, I Chose SPDR ® S&P 500 ® ESG ETF as my investment after looking through the cost of ownership, the future value, and the return overtime of the investment. First of all, I chose to allocate $70,000 into this investment for a 5-year period with a rate of return of 5%, the average return since the inception of SDPR 2 | P a g e S&P500 is 12.68%. Also, the expected future value of the investment after 5 years is $88,894. Furthermore, the cost of ownership which stands at $395 in 5 years of owning this ETF. This is an $18,894 profit in 5 years which is considered a good investment and because of how ETFs work it is considered not a very risky investment. 2- American Funds U.S. Government Securities Fund ® Class C Government securities fund means that the investment is in a pool of investment products provided by a government entity. Treasury bonds, bills, and notes issued by the U.S. Treasury are the most popular forms of government securities. Government securities include a guarantee that, upon maturity, the principal invested will be fully repaid. For this portfolio, I chose American Funds U.S. Government Securities Fund ® Class C after analyzing its data which includes the cost of ownership, the future value, and the return overtime of the investment. Firstly, I chose to invest $110,000 for 5 years with an expected rate of return of 5%, the average return since the beginning of this fund is 2.26%, the expected future value of the investment in 5 years is $131,425. Government securities re ...

1. I am a Mutual fund manager working in a very successful
investment company, I build
and construct portfolio for investors based on their risk
tolerance and expected returns.
A retail investor has approached me so I can build him his
portfolio, he is relatively
cautious since his expected returns per year is 3.5% which
makes him not an
adventurous investor, this means that the portfolio I construct
has to be well diversified
with a variety of different types of funds and I have to keep the
risk at a particularly low
level. The initial capital outlay provided by the investor is
$500,000 and he/she wants
at least six funds in his/her portfolio. In this paper, I will be
identifying the 6 funds I
have chosen while explaining why I chose each fund, what are
the expected returns
from each fund, and why I chose to allocate these amounts into
each fund.
The Funds I have Chosen:
1-
SPDR® S&P 500® ESG ETF
An ETF (Exchange-Traded Fund) operates like a mutual fund in
the fact that it has
multiple investment securities in it. Regularly, ETFs can
include different types of
investments such as stocks, bonds, and commodities. The main
difference
between an ETF and a mutual fund is that ETFs can be traded
like stocks

2. (throughout the day) which causes the ETFs prices to fluctuate
throughout the day,
on the other hand, mutual funds are traded once a day at market
close. For this
Portfolio, I Chose SPDR
® S&P 500
® ESG ETF as my investment after looking
through the cost of ownership, the future value, and the return
overtime of the
investment. First of all, I chose to allocate $70,000 into this
investment for a 5-year
period with a rate of return of 5%, the average return since the
inception of SDPR
2 | P a g e
S&P500 is 12.68%. Also, the expected future value of the
investment after 5 years
is $88,894. Furthermore, the cost of ownership which stands at
$395 in 5 years of
owning this ETF. This is an $18,894 profit in 5 years which is
considered a good
investment and because of how ETFs work it is considered not a
very risky
investment.
2-
American Funds U.S. Government Securities Fund ®
Class C
Government securities fund means that the investment is in a
pool of investment
products provided by a government entity. Treasury bonds,
bills, and notes issued
by the U.S. Treasury are the most popular forms of government
securities.
Government securities include a guarantee that, upon maturity,

3. the principal
invested will be fully repaid. For this portfolio, I chose
American Funds U.S.
Government Securities Fund
® Class C after analyzing its data which includes the
cost of ownership, the future value, and the return overtime of
the investment.
Firstly, I chose to invest $110,000 for 5 years with an expected
rate of return of 5%,
the average return since the beginning of this fund is 2.26%, the
expected future
value of the investment in 5 years is $131,425. Government
securities regularly
have high cost for ownership because they sometimes offer
coupons and interest
payments, knowing that, the cost of ownership of American
Funds U.S.
Government Securities Fund® Class C is $7,946 after the 5
years of ownership.
Since the government that issued them backs them, these
securities are regarded
as conservative investments with low risk.
3-
Nationwide S&P 500 index Fund Class C.
3 | P a g e
An index fund is a specific kind of mutual fund or ETF whose
portfolio is built to
correspond to or follow the component parts of a financial
market index, for
example, like the index fund I chose which tracks down the S&P
500. Broad market
exposure, minimal operating costs, and slight portfolio turnover
are all benefits of

4. index mutual funds. Regardless of the status of the markets,
these funds hold to
their benchmark index. For this portfolio, I chose Nationwide
S&P 500 index Fund
Class C after analyzing its data which includes the cost of
ownership, the future
value, and the return overtime of the investment. First of all, I
chose to invest
$100,000 for 5 years with a rate of return of 5%, the average
return since the
beginning of this fund is 11.70% and as of 5 years it is 10.46%.
the future value of
the investment after 5 years is $119,896, and the investment
objective of the fund
is Growth and Income. The total cost of ownership for
Nationwide S&P 500 index
Fund Class C in 5 years is $6,853. When choosing this index
fund, I focused on
choosing the fund with the lowest ownership cost and best
returns. Index funds
follow a passive investment strategy and are considered best for
people that are
near retirement as it is considered better than saving your
money, also in
comparison to actively managed funds, index funds incur fewer
costs and fees.
4-
JPMorgan Hedged Equity Fund Class C
Hedge funds are basically aggressive risk seeking investment
funds that normally
use leverage to increase returns, Hedge funds are limited
partnerships made up of
individual investors whose money is handled by qualified fund
managers. This type
of investment is considered more risky than mutual funds and
ETFs, also it has a

5. 4 | P a g e
high ownership fee because of the high returns it can get. In my
portfolio I chose
JPMorgan Hedged Equity Fund Class C, JPMorgan stands for
JPMorgan Chase
and Co., I chose this fund after analyzing its data which
includes the cost of
ownership, the future value, and the return overtime of the
investment. I chose to
invest $100,000 into JPMorgan Hedged Equity Fund Class C for
5 years with a
rate of return of 5%. This fund’s average return since its
inception is 6.46% and as
of 5 years it is 6.36%. the future value of the investment after 5
years is $119,417
and the investment objective of the fund is Growth. The cost of
ownership of this
fund for 5 years is $7,277, this is a high fee because hedge
funds normally have a
high operational cost. Many hedge funds are attractive because
of the standing of
their managers in the exclusive world of hedge fund investment,
and JPMorgan is
considered to be very highly reputable.
5-
BlackRock Real Estate Securities Fund Investor C
Shares
A real estate portfolio is a grouping of several investment assets
that are held and
managed to reach a certain financial objective. It is a strategic
database of ongoing
and completed real estate transactions, including rental homes,
rehab projects,
and Real Estate Investment Trusts (REITs), with the goal of

6. generating financial
gains (Merrill, 2022). I chose BlackRock Real Estate Securities
Fund Investor C
Shares after analyzing its data which includes the cost of
ownership, the future
value, and the return overtime of the investment. I chose to
invest $100,000 in this
fund for 5 years with a rate of return of 5%. The average return
since the inception
of the fund is 7.55% and as of 5 years a 6.20%. After 5 years
the invest of 100,000
is expected to grow to $116,935 and the investment objective of
the fund is
5 | P a g e
“Specialty - Real Estate”. Owning this fund for 5 years will cost
$9,471, this is a
very high fee when compared to my other investments, but this
is because real
estate is a very risky fee and to make profits from it is very
difficult and needs
specialists. Finally, Real estate is a highly un-liquid asset and it
is difficult to turn
into liquid quickly, because of that it is considered more of a
long-term investment.
6-
Cash
Finally, I chose to have $20,000 in cash in the portfolio,
because of the tough
economic times we are going through and the huge uncertainty
in the market,
investment banks are recommending that investors should
increase the amount of
liquidity in their portfolios, this is to ensure that if you need
liquid funds at any time,

7. they are available. The two main reasons of holding cash in
your portfolio are:
1-
Liquidity:
For aggressive investors in particular, one of the main benefits
of having cash
is liquidity, which enables opportunistic purchases when firm
valuations fall to
desirable levels.
2-
Decrease portfolio volatility:
While keeping cash in a portfolio may reduce returns while
markets rise, its
steady value can act as an anchor to contain losses when
markets fall.
6 | P a g e
In Conclusion, I choose to invest in 6 completely different
funds which include an ETF,
a Government security fund, an index fund, a hedge fund, real
estate securities, and
Cash. Doing this made the portfolio completely diversified
which should decrease the
overall level of risk of the portfolio. Furthermore, I choose to
invest different amounts
in the different funds depending on their ownership fees and the
return on the
investment, and for Cash I chose $20,000 because I wanted to
have 4% of the total
amount of money invested in cash reserve. Finally, because of
the low expected return
of 3.5% I tried to choose funds that have an average return close
to that as explained
above.
7 | P a g e

8. REFERENCES:
-
All Analyzing date is from the website provided on the task
brief
(https://tools.finra.org/fund_analyzer/search)
Referenced as: “Fund Analyzer: Tools & Calculators.”
Fund Analyzer | Tools &
Calculators, https://tools.finra.org/fund_analyzer/search.
-
-
Chen, James. “What Is an Exchange Traded Fund (ETF)?”
Investopedia,
Investopedia, 5 Sept. 2022,
https://www.investopedia.com/terms/e/etf.asp.
Chen, James. “A Review of the Types of Government Securities
for
Investors.”
Investopedia,
Investopedia,
8
Feb.
2022,
https://www.investopedia.com/terms/g/governmentsecurity.asp.
-
-
Fernando, Jason. “Index Fund Definition.”
Investopedia, Investopedia, 28 July
2022, https://www.investopedia.com/terms/i/indexfund.asp.
Team, The Investopedia. “What Is a Hedge Fund? Examples,
Types, and

9. Strategies.”
Investopedia,
Investopedia,
8
Sept.
2022,
https://www.investopedia.com/terms/h/hedgefund.asp.
8 | P a g e
-
Merrill, Than. “How to Build Your Real Estate Portfolio.”
FortuneBuilders,
FortuneBuilders, 21 July 2022,
https://www.fortunebuilders.com/building-
substantial-rental-portfolio/.
-
Krohnfeldt, Jeff. “3 Reasons Cash Is a Smart Position in Your
Portfolio.”
Investopedia,
Investopedia,
19
May
2021,
https://www.investopedia.com/articles/investing/072316/3-
reasons-cash-
smart-position-your-portfolio.asp.
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You are a mutual fund manager for a successful investment
company. You have been approached by a retail investor to
create an investment portfolio of SIX funds with an initial
capital outlay of $500,000. The investor, although risk averse
(safe investor), is aiming for a minimum return of 3.5% per
annum.
You are required to construct an appropriate portfolio from
your own selection of funds (real ones) and to explain why you
have chosen them.
Diversification is preferred. Between Cash, bonds, shares (stock
market), mutual funds, ETF, index funds, and real estate funds.
1,500 words
https://tools.finra.org/fund_analyzer/search