Assignment Harvard Case Solution & Analysis

Assignment Case Study Solution

Discretionary investment management

A variety of the discretionary investmentmanagement solution are provided by financial institutions tailored to the specific requirements and needs of the each client. Offering the discretionary investment management services allows banks to free up clients from grabbling with the complex capital market and financial issues and the burden of making investment decision on regular basis which could arguably be better made by the portfolio manager as he is attuned to the market vagaries.The banks also help clients enhance cash flow, drive sales, manage cost and improve the overall financial standing of the company in the competitive market arena.

Investment advisory services

The financial institutions also provide the investment advisory services to its clients and interact with them or provide the general and passive advice on which securities or industries are bearish and bullish. In developing the financial or investment strategy; the banks offers insight tools and expertise to help the clients to reach theirobjectives. The bank most likely offers the fixed income, rock-solid equity and alternative investment strategies. The financial advisors provide the informed views as well as the experiencedguidance on the capital markets that the clients could utilize with an intent of making portfolio decisions.

Productsoffered by Private Banks to its clients

There is avariety of products that are offered by the private banks to its clients, including:deposits and real estate investment, foreignexchange, structured products, equities and fixed income securities.

Deposits and real estate investment

The real estate investmentis attractive to the investors in a way that it provides better returns as compared to the stock market. Additionally, the decision of investing in the real estate offers comprehensive risk adjusted returns, equity building, tax breaks, sustained cash flows and hedge against the inflation. Not only this, the investment is attractive to investors because of the fact that the real estate enhances the portfolio by reducing the volatility via diversificationno matter they invest in REITs or physical properties. Similarly, the deposits is another way of building wealth and exploiting the opportunities of increasing the financial worth. By investing, the potential to gain gets higher for the investors.

Structured products

In addition to this, the structured products tends to allow the investors to participate in portfolio of severalsecurities with core considerationoverminimizing the market risk. It is considered one of the attractive investments for those investors who don’t want to risk their capital. It offers the medium risk investing method and satisfactory yields to the investors.

Investment in equities

One of the noticeable benefit of investing the money in the stock market is the chance to grow the money. Over the period of time, the stock market tend to rise in value despite of the prices of the individual stock having fall.. The investment in the equity share capital allows the investors to receive the dividend or capital gain from the company. Additionally, in case the company incursa major loss; the share of loss above and over the invested capital would not be bore by the investors. The investment in the equity also allows the investors to have an exercise control over the company (by having voting rights) and have a ownership in the company as well.

Fixed income securities

In addition to this; the investment in the fixed income securities provide the steady income stream to the investors generated from the portfolio balance. The preferred stock, CDs and bonds pay a steady interest and dividend payment to investors, hence allowing them to relish the consistent cash flows.

Financial product development

The financial industry has been quote adept at successfully creating as well as marketing the financial products. A number of financial products have been successful, which have generated massive amount of money for the financial institutions that offer them and the investors. With the passage of time; the requirement of the small, medium and large size companies to raise the finance, have been addressed by introducing the new financial products which however entails the greater degree of risk.

Exchange traded funds (ETFs)

Exchange traded funds (ETFs) is recognized as one of the greatest investment vehicles for the small as well as large investors alike. The Exchange traded funds tend to have low fees and high daily liquidity, making them attractive from the investors. Some of the ETFs offer the leveraged returns to the investors and most ETFs are cost effective for the retail investors but they might not be adequately suitable for the institutional sized investors. Apart from the returns, the equity based commodity ETFs coulddecline in value in the falling equity market even if the price of commodities are increasing in the future or sport markets.(Scarpinell, 2018).

Commodity linked notes (CLNs)

The CLNs are the structure products that are created via financial engineering so that the risk exposures of commodity are generated through position in the commodity derivatives. It is issued by the large financial institutions in order to meet the return and risk preferences of the potentialinvestors. It provides variety of benefits to the investors such as; the CLNs is the debt instrument, even though many investors tend to have a restriction on investment on direct position in future contracts, they could receive the commodity exposure through Commodity linked notes.

All in all, these instruments tend to offer the return to the investors in the shape of the promises of liquidity, transparency and the low cost advantage and its flexible nature. Also, these investmentsallow the investors to bet on the basket of the assets without asking themto pick other assets or individual shares.(Donald R. Chambers, 2015).......................................


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