FINM3008/6016 Portfolio Construction Tutorial #1

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FINM3008/6016 Portfolio Construction

Tutorial #1 – Outline

Question 1 – Industry Trends

Below is a list of discussion points related to the size and composition of funds under management (FUM) in the fund management industry.

(a) Identify 3 major trends observed over the last 10 - 20 years in Australian and around the world.

(Comment: More than just three trends exist: the aim is to get students to contribute to creating a more expansive list during the tutorial).  

(b) What are the two major drivers of change in the volume and composition of FUM?

(c) In what ways does the composition of FUM differ from that suggested by the finance theory you have learned?

In preparing for the discussion, you might examine the supplementary readings for this week. Identify and discuss the trends in a global context and the Australian domestic market.

Question 2 – Agency Issues

A number of agency problems arise from the delegation of the investment process to professional managers. Identify three such problems, and be able to discuss their nature and implications for investors.

(Comment: More than just three agency problems exist. Again, the aim is to get students to contribute to creating a more expansive list during the tutorial and appreciate the source of such agency issues).