Money Management Harvard Case Solution & Analysis

Money Management Case Study Solution 

Investor’s profile,

Investing through portfolio management is very different from investment in a particular business. Investment in multiple companies exposes the investor to various risks, and at the same time allows the investor to lower down the risk by spreading.

Unlike business management, in portfolio management, the decisions are reflected by investor’s character and nature. Following are the crucial factors of an investor’s nature that reflects in portfolio management:

  • Character
  • Sense of Risk
  • Life-Style
  • Objectives

Character – A proprietor has a different character from a local agent or a shareholder or an infant investor. To support our case of investment management, let us keep investor’s character of an individual who has minor interests in equities of several companies and is looking to expand his/her investment portfolio.

The sense of Risk – Usually there are two kinds of risk takers, a risk averse and a risk seeker, however, there are some who possesses the ability to balance the risk by having both characters.Since I belong to the later one, let us keep the one who reflects the combination of both (Risk averse and risk taker).

Lifestyle – The age, maturity, and living style of an investor have a reasonable impact on his decisions. For example, a student of high school may not think much before investing in a new company. But an experienced adult will probably do some research and seek expert’s advice before making up his mind. For the sake of this case, I am assuming a new investor who has been investing in market shares occasionally and is now looking to maintain a portfolio through handling several investments at a time.

Objective –Objectivity is a vital part of investment decision. If the objective is to earn returns for a long period, the investor may choose a well reputable and stable company. But if the purpose is to benefit from short-term investment or to earn capital gain from market trading, then a more volatile company with fluctuating share prices should be targeted. For the below case, our objectivity would be to keep a strong portfolio and invest with the intention of maintaining long-term relations with the companies he/she has invested inuntil the investment seems too risky to hold on to.

Macroeconomic View:

My target country is Sweden. Following are some characteristics of Sweden’s economy:

  • Sweden’s population is currently at 9.9 million and has an average annual growth rate of 2%.
  • Sweden was ranked number 1 in the Forbes’ annual list of “Best Countries for Business” in January 2017.
  • According to World Economic Forum’s publish, Sweden comes at sixth place in the Global Competitiveness Index of 2016 with a growth of 3.7% in are cent
  • In addition to the business side, Sweden is known as one of the most transparent countries on the globe and has even earned 4th rank in “Corruption Perception Index” in Transparency International’s latest publish.
  • Sweden has proven itself as an innovative country with individuals determined to hard and smart working, in fact, European Innovation Scoreboard of 2016 (by European Commission) has declared Sweden as the world leader among innovative countries.(weforum, 2017)
  • Sweden has claimed to have reached the all-time highest exports of 119,200 million Swedish Krone in March 2017 (jumping from SEK 100,400 million). Hence, Sweden-based businesses are in luck and have the opportunity to expand through exports.(Trading Economics, 2017)

Investment funds in Sweden have been enjoying through country’s growth. Sweden’s growth in the economy, exports and businesses have benefitted all the sectors and has made the investors happier than ever. Following are some examples of the impact of Sweden growth on Sweden-based mutual funds.

In March with the ever-highest export record of approximately 1.19 million, investment funds also got affected and made a new record of SEK 3738 billion in the Total Assets of fund investments.

According to a publish of Mark Cobley from Financial News the Swedish Mutual fund, MFEX, had expanded by 50% in 2016.(Cobley, 2017)

In addition to Mutual Funds, Sweden-based Exchange traded funds (ETFs) like The Ishare MSCI has also grown in recent years.

The difference between ETFs and Mutual Funds:

Exchange traded funds are traded alongside shares in the market, and therefore their prices fluctuate many times within a day.

A mutual fund on the other side stays constant, the whole day, and is only traded at the end of the day, on the net asset value price.

Money Management Harvard Case Solution & Analysis



Market Research:

An effective investment strategy is one which covers all the aspects of the market and is dependent upon research of target companies or entities of target mutual funds. Since we are investing in Exchange-traded-funds, of Sweden-based companies (or with Sweden Company exposure), it is crucial to know everything there is to know about the targeted ETFs.

We have researched our 5 targeted Exchange-Traded Funds and have found the following data:

share MSCI (Code – EWD):

Is hare is currently trading at the US $33.11 and is mainly focused on the Industrial sector with interest of 34.63%. Its other top 4 focused sectors are Financial Services with 32.66 %, Technology with 9.47%, Consumer’s Defensive with 7.47% and Consumer Cyclical with 5.92%.

Thus to cover Industrial and financial sectors, it would be appropriate to invest in share.

The top 5 holding of share are:

  • Nordia Bank AB
  • Volvo AB B
  • Atlas Copco AB A
  • Hennes&Mauritz AB B
  • SvenskaHandelsbanken ..........................

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