CENTRAL UNIVERSITY COLLEGE

MASTER OF BUSINESS ADMINISTRATION

Thesis Proposal

Empirical study into portfolio management: a case study of SAS Investment Management Ltd.

LOUIS WEBSTARR ADU

CHAPTER ONE INTRODUCTION 1.0 Background of the Study

Investing in securities such as shares, debentures, and bonds is profitable as well as exciting. It is indeed rewarding, but involves a great deal of risk and calls for scientific knowledge as well as artistic skill. In such investments both rationale and emotional responses are involved. Investing in financial securities is now considered to be one of the best avenues for investing one's savings while it is acknowledged to be one of the most risky avenues of investment. It is rare to find investors investing their entire savings in a single security. Instead, they tend to invest in a group of securities. Such a group of securities is called portfolio Creation of a portfolio helps to reduce risk without sacrificing returns. Portfolio management deals with the analysis of individual securities as well as with the theory and practice of optimally combining securities into portfolios. An investor who understands the fundamental principles and analytical aspects of portfolio management has a better chance of success. An investor considering investment in securities is faced with the problem of choosing from among a large number of securities and how to allocate his funds over this group of securities. Again he is faced with problem of deciding which securities to hold and how much to invest in each. The risk and return characteristics of portfolios. The investor tries to choose the optimal portfolio taking into consideration the risk return characteristics of all possible portfolios. As the risk return characteristics of individual securities as well as portfolios also change. This calls for periodic review and revision of investment portfolios of investors. An investor invests his funds in a portfolio expecting to get good returns consistent with the risk that he has to bear. The return

realized from the portfolio has to be measured and the performance of the portfolio has to be evaluated. It is evident that rational investment activity involves creation of an investment portfolio. Portfolio management comprises all the processes involved in the creation and maintenance of an investment portfolio. It deals specifically with the security analysis, portfolio analysis, portfolio selection, portfolio revision & portfolio evaluation. Portfolio management makes use of analytical techniques of analysis and conceptual theories regarding rational allocation of funds. Portfolio management is a complex process which tries to make investment activity more rewarding and less risky This thesis deals with the different investment decisions made by different people and focuses on the element of risk in detail while investing in securities. It also explains how portfolio hedges the risk in investment and giving optimum return to a given amount of risk. It also gives an in depth analysis of portfolio creation, selection, revision and evaluation. The thesis also shows different ways of analysis of securities, different theories of portfolio management for effective and efficient portfolio construction. It also gives a brief analysis of how to evaluate a portfolio.

1.2

Problem Statement

Majority of the population do not know the factors to consider when making investment decisions. Even though they are interested in investing into share market and other securities with the expectation of making good returns; they end up investing on rumors/tips thereby making losses due to lack of appropriate knowledge on the investment mix to adapt. The business of portfolio management has never been an easy one. Juggling the limited choices at hand with the twin requirements of adequate safety and sizeable returns is a task fraught with

complexities. Professional Portfolio Managers with shallow knowledge and not knowing how to make the right move in the right direction at the right time are making little or no return for their clients.

1.3

Objectives To make an in depth study on the overall concepts of the portfolio management To find out the essence and benefits of portfolio management, the shortfalls and challenges To find out the various factors that an investor should take into consideration to make proper investment decisions

To identify the best portfolio of securities To conduct an in depth analysis of the risk and return characteristics of stocks related to different industries and different companies

To study how investors to decide on effective portfolio of securities

1.4

Methodology

Primary Sources: Empirical study will be used to gather information and consists of the following parts:

Periodic visits will be made to chosen investment brokers to collect data. Relevant data also obtained from chosen company journals. Primary data collected from news papers & magazines is also used.

Secondary Sources:

A literature will be gathered from libraries of the various universities in Ghana. Published and unpublished sources will be used. Journals, periodicals, dissertations, theses and textbooks will be used and library reference services will be consulted. Information not available from publications, but relevant to the research will be gathered from the Internet.

1.5

Significance of the Study

This study will be a significant endeavor in promoting good understanding of portfolio management and the level of diversification on per case basis. This study will also bring to fore the necessary options for individuals and corporate institutions to consider toward finding the correct portfolio mix for their investments. Further, this report will highlight the many factors that go into creating the right strategy for an investor: Some are personal your income, your risk tolerance, your family situation and period to retirement. Some are external for example, what you and/or your financial advisor think about the direction of the market. If you believe that the market is headed lower over a certain period, youll likely move more assets into cash or adopt a hedging strategy. Additionally, this research work identify how the portfolio management has to be done in arriving at the effective one and at the same time make aware the investor to choose the securities which they want to put in their portfolio

1.6

Organization of Study

The study will be presented in five chapters.

Chapter one describes the problem statement, the motivation for the research, the objective of the study, the significance of the study, methodology and the limitation and delimitation of the study.

Chapter two details the literature review on portfolio management. This literature will serve as a theoretical framework for analyzing the results of the project.

Chapter three will consider the research methodology: This includes the sample size use, techniques and the research approaches.

Chapter four duels on the discussion and analysis of the results obtained in the previous chapter. This discussion will concentrate on the findings, analyzing, interpretation of results and integration of findings from the survey with the literature study in order to develop a model.

Chapter five being the last but not the least chapter focuses on conclusions and recommendations of the study.

1.7

Limitations

The data collected is basically confined to secondary sources, with very little amount of primary data associated with the project.

There is a constraint with regard to time allocated for the research study. The availability of information in the form of annual reports & price fluctuations of the company is a big constraint to the study.

The researcher being in fulltime employment finds it extremely difficult to obtain permission from work to collect relevant data from the organization understudy.

1.8

Delimitation of the Study

The study will mainly focus on portfolio management and the necessary strategies to adopt for a profitable portfolio of securities. Although, there are numerous funds management companies in Ghana, this research work centers on SAS Investment Management Ltd as a case study. Some relevant inputs will also be sort from the Securities and Exchanges Commission - the statutory body charged with the oversight and regulatory responsibility over all Investment and Security Companies in the country. The statistical tools used for the study are risk, return, average, variance, and correlation.

1.9

Research Schedule Complete and submit Chapter 1 Complete and submit chapters 2 and 3 Complete and Submit chapters 4 and 5 Complete and submit complete draft of work Supervisor submits marked works to you Group members submit finished works to supervisor for signing and submit at MBA secretariat

24th to 30th September 2012 1st to 31st October 2012 1st to 30th November 2012 21st December 2012 15th January 2013 30th January 2013

2.0

REFERENCES:

Managing Investment Portfolios: A Dynamic Process (CFA Institute Investment Series) Third Edition by John L. Maginn Wiley; 3 edition (March 9, 2007) The Intelligent Asset Allocator: How to Build Your Portfolio to Maximize Returns and Minimize Risk McGraw-Hill; 1 edition (September 22, 2000) by William Bernstein www.investopedia.com