Analysis of the investment environment, UK, Nelly Capital business, investment climate, investment environment, UK investors
Traditionally, the investment climate in a country or in the world refers to the prevailing financial and economic conditions that affect the investors in a place. In this case, an investor is an individual or institution that is willing to lend money to an operating business in order to get a stake there. Notably, Johnson (2013) implies that, the rate of investment depends on the investment environment in a country. Further, the investment environment of any country is also linked to that of the whole world. As such, a favourable investment leads to an increase in investment while an unfavourable investment environment discourages investment. This report presents an analysis of the investment environment of UK with regard to the Nelly Capital business. It also presents alternatives for asset allocations for the business, and the necessary investment approaches that may be applicable to the business.
[...] With this environment, Nelly Capital has various choices in which it may allocate its assets. Importantly, the process of asset allocation involves balancing the risks and the reward of investments based on the investor's tolerance for risk, time frame of the investment and the objectives they have. The process of asset allocation involves the assets invested in a given portfolio with the aim of balancing the total risks and rewards (Abbink2010). Further, Abbink finds out that the return of an investment portfolio is dependent on the asset allocation. [...]
[...] Great Britain. (2011). The impact of UK overseas aid on environmental protection and climate change adaptation and mitigation: fifth report of session 2010-12. Vol Vol London, Stationery Office. Johnson, R. S. (2013). Debt markets and analysis. Hoboken, N.J., John Wiley & Sons Lee, W. (2000). Theory and methodology of tactical asset allocation. [...]
[...] New Hope Frank J. Fabozzi Associates. Reilly, F. K., & Brown, K. C. (2012). Investment analysis and portfolio management.Mason, Ohio, South-Western Cengage Learning. Roncalli, T. (2014). Introducing Expected Returns into Risk Parity Portfolios: A New Framework for Asset Allocation. Available at SSRN 2321309.http://www.thierry-roncalli.com/download/active-risk- parity.pdf Swedroe, L. [...]
[...] As such, asset allocation would be necessary given the current investment environment that would rebalance the portfolio in a manner that generates inflows periodically (Abbink2010). Apparently, many of the assets the Nelly Capital has invested in are long term in nature and generate income after a longer period of time. At one hand, Lee(2000) asserts that an application of the tactical asset allocation strategy would be welcome to rebalance the equities so that they may generate the deficit inflows. Another necessary rebalancing would involve the conversion of some bonds into various short-term instruments that generate inflows of cash after a short period of time. [...]
[...] Nelly Capital, therefore, due to the improved investment environment of the UK and its allies, as well as due to the efficient financial markets, has a wide range of assets upon which to balance its allocation. Currently, the Nelly Capital group allocates its assets worth 50 million pounds to three portfolios namely equities both in UK and in the overseas, bonds of the UK corporations, government and European governments, and then the short term instruments. Based on the goals for investment, tolerances to risks, and the frame of time two strategies may be pursued to assist in the asset allocation process. [...]
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