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Portfolio Construction: Choosing a Suitable Investment Option

Managing an investment project in the environment of the global economy is fraught with numerous risks. Primarily, the possibility of a crisis deserves to be mentioned. Herein the need to adopt the strategies aimed at investing in developing entrepreneurship lies.

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Objectives

The key objective of the specified portfolio concerns increasing the current capital. Investing in trustworthy and promising ventures so that the specified goal can be achieved can be viewed as the secondary objective of the project.

Choices

The reasons for the choices made are quite obvious. Seeing that the Royal Dutch Shell PLC is in the top 100 of the world’s most successful organizations, it is reasonable to consider it as an investment option. One might argue that the specified organization is far from being at the top of the current list of the world’s most successful firms. While the specified observation is true, one must add that the Royal Dutch Shell PLC has been displaying the tendency for an increase in its stock prices, as shown in Fig. 1, whereas the rest of the organizations have been witnessing a consistent drop in the price per share. Therefore, it will be reasonable to assume that entrepreneurship will continue showing the same positive tendency in the future.

RDSB Share Price
Figure 1. RDSB Share Price (Royal Dutch Shell Plc (LON: RDSB), 2015).

Likewise, the choice of the iShares Core Long-Term U.S. Bond ETF (ILTB) was predetermined by the fact that the organization selling it (BlackRock) can be deemed as a fairly trustworthy corporation with a rather good score in the bond market. The recent rebranding of the organization can be viewed as a rather positive change that is likely to increase the firm’s performance rates and, therefore, triggers a rise in the bond price (Fig. 2) (Fang & Hung, 2014). The fact that the specified bond can be deemed as a multi-sector also opens a range of opportunities for investment and further growth.

iShares Performance (2010–2015)
Figure 2. iShares Performance (2010–2015) (iShares Core 10+ Year USD bond ETF, 2015).

As far as the mutual bonds are concerned, it was decided to invest in the GuideStone Funds Extended-Duration Bond Fund (GEDYX), as shown in Appendix A. The choice of the mutual fund in question, in fact, defines the investment style of this project to a considerable degree. Particularly, the growth style has been chosen in order to make sure that the value of the stock acquired is going to increase (Gitman, Joehnk, & Smart, 2011). Indeed, based on the concept of investing in the shares that are going to grow and, therefore, bring an increasingly large amount of benefit, the specified strategy allows for rather efficient management of the entrepreneurship’s resources, including the financial ones.

 GuideStone Funds Extended-Duration Bond Fund (GEDYX).
Figure 3. GuideStone Funds Extended-Duration Bond Fund (GEDYX) (GuideStone Funds – extended-duration bond fund, 2015).

By choosing the strategy aimed at investing in entrepreneurship that develops slowly but surely, one will be able to avoid a number of risks. Particularly, the threat of a sudden crisis and the following untimely demise of the organization that was used as the investment target can be avoided successfully with the help of the designated approach (Wang, 2011). Facilitating safe operations of a firm in the realm of the global economy is an essential step toward success; therefore, the specified approach can be deemed as acceptable.

The amount of money left after the specified transactions are made ($524.83) can be used for investing in a GE Capital Bank 6-month certificate of deposit ($500 (GE Capital Bank, 2015)). Particularly, it will make the resource that can be used in the instance of a crisis. Thus, entrepreneurship will be safe in the global economy.

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Reference List

Fang, V., & Hung, C.-H. D. (2014). Corporate bond prices and idiosyncratic risk: Evidence from Australia. Journal of International Financial Markets, Institutions, and Money, 33(2), 305–328.

GE Capital Bank. (2015). Web.

Gitman, L. J., Joehnk, M. D., & Smart, S. B. (2011). Fundamentals of investing (11th ed.). Boston, MA: Pearson.

GuideStone Funds – extended-duration bond fund. (2015). Web.

iShares Core 10+ Year USD bond ETF. (2015). Web.

Royal Dutch Shell Plc (LON: RDSB). (2015). Web.

Wang, J. (2011). Impact of investment horizon on the performance of value versus growth styles and style allocation. Journal of Asset Management, 12(6), 438–446.

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Appendix A: Share Trading Portfolio

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StudyCorgi. (2021, February 10). Portfolio Construction: Choosing a Suitable Investment Option. Retrieved from https://studycorgi.com/portfolio-construction-choosing-a-suitable-investment-option/

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"Portfolio Construction: Choosing a Suitable Investment Option." StudyCorgi, 10 Feb. 2021, studycorgi.com/portfolio-construction-choosing-a-suitable-investment-option/.

1. StudyCorgi. "Portfolio Construction: Choosing a Suitable Investment Option." February 10, 2021. https://studycorgi.com/portfolio-construction-choosing-a-suitable-investment-option/.


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StudyCorgi. "Portfolio Construction: Choosing a Suitable Investment Option." February 10, 2021. https://studycorgi.com/portfolio-construction-choosing-a-suitable-investment-option/.

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StudyCorgi. 2021. "Portfolio Construction: Choosing a Suitable Investment Option." February 10, 2021. https://studycorgi.com/portfolio-construction-choosing-a-suitable-investment-option/.

References

StudyCorgi. (2021) 'Portfolio Construction: Choosing a Suitable Investment Option'. 10 February.

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