Asset Management; Mr. Cohen Harvard Case Solution & Analysis

Portfolio Management

Portfolio management is about making investment decision and policies based on specific circumstance of an individual and risk aversion of the individual. Investment is diversified in to different asset classes or within the same asset class in order to minimize risk and maximize investment potential.

Mr. W.Cohen is a 56 years old investor and is earning good income which is self-sufficient enough and he is saving up to EUR 20,000 per year. W.Cohen liquidity needs are low as he is single have no children and there are not any unforeseen expenses in near future. The current value of the portfolio is EUR 450,000 and Mr. W.Cohen majorly invests in government bonds and near liquid investment. Government bonds and liquid investment are considered safe and yield low return due to being liquid in nature, and as the Government bond is backed with sovereign guarantee therefore,that is why they also yield low return.

As Mr. W.Cohen’s liquidity preference is low, as he has no major expenses in the near future. As he has no kids therefore,there are no education expenses. Mr. W.Cohen is in a position to take higher risk and convert a part of his portfolio from risk free debt instrument to more risky assets, which include shares and alternatives investment.

Risky assets such as shares yield high profit and are considered as long term investment. Alternative investment include derivatives instrument on commodities, and other underlying assets. A mix of portfolio will help in generating more than 6% of investment per year. As Mr. W.Cohen is in higher tax bracket investment growth, this will yield higher investment and will be reinvested as compared to receiving cash, which will be taxed up to 45% as per Mr. W.Cohen’s tax bracket.

Suggested portfolio for Mr. W.Cohen is as follow,

As per pie graph 60% of investment should be made in bonds or debt securities, while 20% should be made in stock and remaining 20% should be split into alternative investment and cash.

This suggested portfolio will increase potential return and will also help in save taxes as well. Tax consideration is also important as Mr. W.Cohen seems likely to be in higher tax bracket and if investment is managed in a way then that tax can be deferred through reinvestment and through smart tax and portfolio planning.

Government bonds which are backed by sovereign guarantee yield low return.Investment can be made in corporate bond of investment grade which yields high return,therefore,within bonds and debt instrument debt portfolio can be made.

Asset Management; Mr. Cohen Case Solution

Under Stock there are different shares that are associated with large cap and small cap. Investment into these stocks should be sub divided into these caps in order to diversify within asset class.

Alternative investment mainly consists of derivatives instrument that are highly risky but also generate good profit as it can be long and short. There are many mutual funds and ETFS in which Mr. Cohen can take exposure.


It can be recommended that there should be a major change in the portfolio as suggested earlier on the basis of Mr. Cohen circumstance. Also, change in portfolio will yield potential high return and it will exceed 6% expectation.............

This is just a sample partial case solution. Please place the order on the website to order your own originally done case solution.

Share This


Save Up To




Register now and save up to 30%.