Socially Responsible Investing – Portfolio Analysis

General guidelines:

The objective of this course is to learn about SRI through readings, research and a hands-on application via a portfolio simulation program. This course includes analysis of mutual fund performances based on various criteria. These criteria emphasize components of SRI such as faith based and corporate social performance as well as financial performance.

Portfolio grades are not based on the dollar amounts of portfolios or rankings in class so feel free to experiment within the realms of the SRI and financial theories and concepts that are covered in this course. Have fun.

Portfolio grades are based on your analysis and presentation as well as your research notebook which is a running log of your readings, class discussions, data collection and portfolio assessment. You should present the data you use in your decision making process in a clear and easy to understand format. Your analysis should continually be founded in the concepts covered in class. This does not mean you must perfectly forecast the market (impossible) but give reasons as to why you made certain choices. In the final stages of the project, you will use all that you learned in the course to once again assess how well you met your initial objectives based on the criteria of faith based, CSP and financial performance.

Read all of the Stages of the Portfolio Project before you start. This is one continuous project divided into smaller stages (Portfolio Analysis Stage 1 – 3) with Stage 3 including a completed Portfolio Analysis (Stage 1-3) and a presentation of portfolio highlights.

Portfolio Analysis: Stage 1

You won the lottery and receive an after-tax sum of $500,000. Measure your risk-aversion (Value Line) and review your asset allocation decision. Create a policy statement or objective which adheres to your financial life plan, your asset allocation and the three required criteria (financial performance, faith based, corporate social performance) that will be explained as the course progresses. Open your StockTrak account and select at least twelve mutual finds that you believe address your financial life plan and your asset allocation. You will assess the portfolio at a later date based on the three performance criteria (financial, faith-based, and corporate social performance). The purpose of this assignment is to just get started. As concepts are covered in class, you will have opportunities to assess and readjust your portfolio through later assignments.

Submit a typed report (5-6 pages). The completed assignment should include your objective, summary of your risk assessment, and discussion of selected mutual funds. Include details on reasons you selected each one.

Portfolio Analysis Stage 2

The assignment is an exercise in understanding the guiding principles of SRI and financial performance of mutual funds. The objective of this assignment is to continuously adjust your current portfolio to better meet the original objectives. As you learn more about SRI and its components of faith based and CSP, determine what percentage of your investments you will direct toward SRI. Explain your decisions. You are required to have a minimum of 5% in SRI. Select funds that meet faith based criteria and funds that meet CSP criteria. (You are required to purchase at least one faith based and one secular (CSP) fund for analysis purposes.) Make adjustments to your portfolio as instructed so to correspond to the SRI criteria studied.

Submit a typed report (10-12 pages). This report, Portfolio Analysis Stage 2 will include your revised versions of Portfolio Analysis Stage 1 and additional information indicating your new SRI mutual fund selections and the research that directed you to these changes in your portfolio. In particular, discuss and explain the mutual funds you selected to match the SRI criteria of faith based and CSP criteria.

Portfolio Analysis Stage 3

The objective of this stage is twofold.

I) Formal Report Stage 3
The objective of this Stage is to assess the current status of your portfolio and make any desired improvements you would like. To achieve this objective, your final report should include the following:
a. Use the Morningstar X Ray Program to get a financial summary report of your portfolio.
b. Based on the financial information provided by the X-Ray in (a) and your understanding of SRI criteria, make an assessment of your current portfolio based on how well it met the initial objective you outlined in Assignment 2 in Stage 1.
c. If necessary, make additional changes to get your portfolio back in line with your objective outlined in Stage 1. Provide a detailed list of these changes you decided to make and your reasons for doing so. If you do not need to make changes, in a summary paragraph explain why that is the case.

Submit a typed report (15-20 pages). This report should include your revised versions of Stage 1 and Stage 2 and your new analysis in Stage 3.

II) Stage 3 also includes a 10 minute presentation on the highlights of your portfolio selections and your analysis of a new fund which I will give you to consider for your portfolio. Analyze the suggested SRI fund based on all of the criteria (financial and SRI). Determine whether you would purchase this suggested fund based on how it fits into your portfolio. For example, if you intend to purchase it, explain why. Also, discuss if the new mutual fund would be an addition to your current portfolio or would it be a replacement for an existing mutual fund that you plan to sell. If you do not intend to purchase the suggested mutual fund, explain why. In your attempts to consider the new mutual fund, use all of the information and research you have collected from the start of the course.

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