Detailed process of Portfolio creation and analysis using Bloomberg

1. Portfolio & Investment Management
Assignment on
Portfolio Creation Using Bloomberg
Submitted By:
Rashmi Sharma

2. Objective: We are creating the diversified portfolio of 6 stocks/securities in
Bloomberg by considering different criterias.
STEP 1: Go To EQS (Equity Screening)
Select the screening criteria :
1) Excahnge – National Stock Exchange of India
2) Sectors – GICS – below is the selection screen for different sectrs
selected.
Media & Entertainment – Nowadays media and entertainment industry
is in high demand, also we can say it has the potential to emerge looking
at the demand and need of the society.
Consumer Discretionary , Consumer Staples and Education Services
comes under the basic need of the people and hence choosing this
sector will help to reduce the risk and will provide stable growth.
Health Care , Capital Goods and Transportation are the sectors were
long term investment can be made because these sectors are defensive
sector for stable and predictable growth, will help to balance the risk
and will help to hedge the economy slowdown risk.
IT Consulting and Other Services: It is the emerging sector and
outperforming sector from past few years and shows remarkable growth
potential in the coming years so considering it in the portfolio seems
profitable.

3. 3) Indices : Select NIFTY 500 to have a pool of large number of stocks.
4) Add Criteria: 3 Criteria have been added to further shortlist the stock
• Annualized Total Return of 3 years to be higher than or equal to
12%. Considered a good return after analysing the market w.r.t
different investment instruments.
• P/E Ratio should be between 10 to 24 – will help to select the
fairly valued stock(considering history of the stock and industry
average P/E value) and will also tell the bearing capacity of the
investors as to earn $1 how much money can one spend.
• Debt to Equity Ratio below 70% - will help to select the
companies with lesser risk of Default. It will help the investor to
provide safety w.r.t to the stocks.
Below is the final screen of the criteria , we can see the number of stocks
shortlisted are 13.
STEP 2: Go To Actions and click on Save As to save the screen. Here the screen
has been saved with the name as Rashmi_53.
Click on See Results.
The below screen will appear, which shows the shortlisted stocks.

4. Now after getting the list of stock we will create the portfolio.
Step 3: Go To PRTU.
Click Create and give the name to the portfolio. Example in below screen the
name given to portfolio is Rashmi_53.
Now to select the 6 stocks of 13 we need to work on Excel to get the ORP.
EXCEL Steps:
Find the Covariance of the stocks.
Then using MPT we will find the ORP as shown below:
Scrips Std Deviation
Expected
Return
TCS 23.88072369 21.08163133
Sonata Software LTD 31.94549841 35.20741083
Mphasis LTD 26.13624233 13.37594752
LTI 29.64692843 32.27932555
KNR Construction LTD 43.96930157 9.750845275
KEI Industries LTD 42.0925711 29.94153069
KEC International 33.82100494 8.793845259
Infosys 21.21901108 20.25572016
Hexaware Technologies 27.47300045 15.46269696
ESCORTS LTD 41.81442786 6.78943871
Vaibhav Global 29.26600953 25.94381431

5. ORP
25.8941
Portfolio
Expected Return
4.1064
Portfolio Std
Dev
4.7473 Sharpe ratio
6.4 Risk Free Rate
ORP(Maximum Sharpe ratio) will give the 6 stocks and their weights which can
be included in the portfolio.

6. Allocation:
Investment
Amount =
10000000 Price Positions
TCS 1967461.206 1975.05 996.158
Sonata 805022.8375 302.55 2660.793
LTI 1654890.144 1796.2 921.328
KEI Industries 725250.0127 456.3 1589.415
Infosys 2069594.679 686.1 3016.462
Vaibhav Global 2777782.351 990 2805.841
After finding the positions we will enter it in the Bloomberg to get the return of
our portfolio.
Step 4: Click on Analyze.
Below screen will appear which shows the performance of our portfolio.
Analysis: Here we can see the performance is in negative majorly due to IT
sector underperforming because of economy slowdown and corona outbreak.
The returns are negative as seen in the screenshot the reason for this is the
current market and economy condition.

7. Step 5: Now to see how our portfolio is performing we will compare it with the
benchmark. To select the benchmark we will go to Funds/ETFs/13Fs then will
search for NIFTY 500 funds. Below is the screen for the same.
Here I have selected the MOTILAL OSWAL NIFTY 500 Fund.
Below is the screen which gives the portfolio performance , benchmark
performance and how our portfolio is performing with respect to benchmark.

8. Interpretation : We can see the consumer Discretionary and Industrials are
performing better than the benchmark but IT is performing lower than the
Benchmark and hence the overall performance of the portfolio is showing
lower than the benchmark.
Analysis : The reason for IT underperforming is the Corona outbreak and
economy slowdown because in our portfolio we have selected more IT stocks
and also the stocks which are less risky so those stocks are giving lower return
in the current situation while the benchmark has more diversification and
riskier stocks and thus giving higher return.
Modification of Portfolio to see the returns:
I have modified the portfolio by including the more risky stocks to increase the
return. Below is the screen for the same where I have removed the
underperforming IT stocks and included the production or manufacturing
companies stock which are more risky.

9. Click on the Analyze button.
We will get the below screen.
Analysis : Here we can see that our portfolio is performing better than the
benchmark’s performance , this is due to inclusion of higher risky stocks of
industries sector and removing underperforming IT stocks.

10. Comparison of Returns based on historical data:
Since for excel analysis we have used past 3 years data it would be best to
compare the portfolio return with Mutual fund return for the past three years.
The below Graph shows the return of the SBI Mutual Fund over the period of 3
years which is around 38%. And our portfolio has the stocks which could have
been given the return of 25% which means this portfolio is not matching the
level of Benchmark. The reason is; we have selected only 6 stocks and hence
less diversification happened and eventually less return.