NO.PZ2022122801000053
问题如下：
Mark DuBord, a financial adviser, works with the Titan State
Foundation (Titan). He meets with the university foundation investment
committee annually to review fund objectives and constraints.
Titan’s
portfolio has a market value of $10 million. After his annual meeting with its
investment committee, DuBord notes the following points:
·
Titan must spend 3% of its
beginning-of-the-year asset value annually to meet legal obligations.
·
The investment committee seeks
exposure to private equity investments and requests DuBord’s review of the
Sun-Fin Private Equity Fund as a potential new investment.
·
A recent declining trend in
enrollment is expected to continue. This is a concern because it has led to a
loss of operating revenue from tuition.
·
Regulatory sanctions and penalties
are likely to result in lower donations over the next five years.
DuBord
supervises two junior analysts and instructs one to formulate new allocations
for Titan. This analyst proposes the allocation presented in Exhibit 1.
Discuss two reasons why the proposed asset allocation is inappropriate for Titan.
选项：
解释：
The proposed asset allocation for Titan is not appropriate because:
1. Given the shift in enrollment trends and declining donations resulting from the sanctions, Titan will likely need greater liquidity in the future because of the increased probability of higher outflows to support university operations. The proposed asset allocation shifts Titan’s allocation into risky assets (increases the relative equity holdings and decreases the relative bond holdings), which would introduce greater uncertainty as to their future value.
2. Titan is relatively small for the proposed addition of private equity. Access to such an asset class as private equity may be constrained for smaller asset owners, such as Titan, who may lack the related internal investment expertise. Additionally, the Sun-Fin Private Equity Fund minimum investment level is $1 million. This level of investment in private equity would be 10% of Titan’s total portfolio value. Given Titan’s declining financial position due to declining enrollments and its resulting potential need for liquidity, private equity at this minimum level of investment is not appropriate for Titan.
Titan must spend 3% of its beginning-of-the-year asset value and the foundation also needs to make sufficient donations, and violation of this may cause regulatory sanctions and penalties, thus the foundation should have more wight on fixed-income asset to generate sufficient cash flows, while the proposed asset allocation ......
请问老师，这样的理由成立吗？
