ALEX SHARPE’S PORTFOLIO

CASE ANALYSIS

BY :- K. Akshay Krishna
PGDM-A
1913013
 INTRODUCTION
• Invested children’s savings in Vanguard 500 fund.
• Vanguard is one of the world’s largest equity and fixed income managers.
• Passive fund management offers low management expense ratio and
higher returns.
• Alex wanted to achieve higher returns and wanted to change her
investment strategy.
• She either wanted to chose Hasbro or R.J. Reynolds.
• Hasbro- An American toy and game company- 2nd largest toy maker in the
world.
• R.J. Reynolds- 2nd largest tobacco firm in the world with approx 30% share
of U.S cigarette market.
 COMPARISON OF STOCKS
S&P 500 Reynolds HASBRO
Reynolds stocks appears to be
the risker stock when
Monthly Standard 3.60% 9.36% 8.11% compared to HASBRO.
deviation

Annual Standard variance of

Annual Variance 1.55% 10.52% 7.904%
Reynolds is 32.46%
Annual Standard Variance of
Annual Standard 12.47% 32.46% 28.11% HASBRO is 28.11%
variance

Monthly Variance 0.13% 0.87% 0.65%

 PORTFOLIO POSITION
S&P5 500 Reynolds HASBRO
Reynolds has higher portfolio return
when compared to HASBRO.
Return 0.57% 1.87% 1.18%

S&P And Reynolds :-

0.99*6.89 + 0.01*22.50.
Annual 6.89% 22.50% 14.21%
Return S&P And HASBRO :-
0.99*6.89 + 0.01*14.21

Annual 7.05% 6.97%

Portfolio HASBRO looks Riskier and has lower
returns.
 BETA FOR EACH STOCK
Co-Variance of Reynolds and S&P = 0.000938549 / 0.001297
= 0.72.
Co-Variance of HASBRO and S&P = 0.001811114 / 0.001297
= 1.40.
 EXPECTED RETURN OF EACH STOCK
market risk 0.06892
risk free return 0.0052
beta for hashbro 1.40
beta for reynolds 0.72
question 4
hashbro rate of return 9.42%
reynolds rate of return 5.13%

HASBRO has the highest rate of return.

THANK YOU