Asset Allocations specs

1. Overall Thinking

I need to create a template for my asset consultants to use in order to balance portfolios with a rule-
based approach.

There are High Asset classes (Australian Shares, International shares, Australian Fixed Interest etc.)

Minor asset classes – (Value, Growth, Small cap)

Funds – these are a function of the above allocations

I need the ability in the spreadsheet to be able to adjust for neutral positions or rebalancing
conditions/order

We need to generate a report at the end that can easily be kept for records into the future allowing
us to look back and demonstrate what decisions were made and what the reasons were at the time.

We need pages reflecting: (for report) – 2 possible reports:

A. By MFM Aggressive and by MFM defensive

a. Portfolio rules and assumptions including neutral positions – I will provide an example
Template
b. Asset class decisions (1-7) and reason for each decision (we need a block for free writing where
the manager can state the reasons as well as selecting the number of the adjusted view of asset class – 1-7)
c. New Adjusted Tactical positions for each asset class compared to neutral – (examples
are in the “Growth allocations” and “defensive allocations” pages
d. New adjusted funds per portfolio
e. The order of this report would be:
a. Heading page (MFM & Activus logos)
b. Explanation of thinking and rules (1-2 pages)
c. Each asset class with a block of comments from manager and the rating
number(better if we could label the numbers eg. Extremely negative, negative,
slightly negative, neutral, slightly positive, positive, extremely positive)
d. Comparison of asset classes - neutral positions vs tactical
e. Fund Allocations
B. Report showing only the combined
a. Comparison of asset classes - neutral positions vs tactical
b. Split Between growth and Defensive – “Example Portfolios”
c. Combined graph of asset classes – “overall asset allocations”
d. Combined graph of funds – “overall fund allocations”

2. Rebalancing Between Asset Classes

The rules are set within the sheet on the tabs “Growth Allocations” and “Defensive Allocations”

I hope that they make sense as I have done them with formulas – first high level and the sector
allocations

Rebalancing rules are as follows:

High Level

1. Rebalance both international and Australian equities on a scale of 1-7 (this would serve to
increase or decrease by up to 30% for the combined 2 asset classes.
2. Once this is done, alternatives would be the rebalancing figure. Lower Level

Australian Equities & International Equities

We go through the various rebalancing steps as per the sheet “Growth Allocations”

One step at a time and with formulas as per sheet

3. Scale

1 -7

Would like the scale to be labelled as Extremely negative, negative, slightly negative, neutral, slightly
positive, positive, extremely positive But have the scores that translated into adjustments either up
or down of the asset classes

4. Reports
Should point to ideal fund allocations but also a disclaimer as important to allocate to the level
above that without unnecessary purchases and sales