Beta Management Company | |
|Investment Management case study |

Table of contents

Backgrounds……………………………………………………….……1
Strategies………………………………………………………………...1
Background of California R.E.I.T and Brown Group Inc……………2
Return and risk…………………………………………………….....…2
Summary………………………………………………………………...4
Appendix………………………………………………………………...5

Background:
Beta Management Company is a small investment management company based in a Boston suburb founded in 1988. As the company developed, they had roughly 25 million dollars in the 1991. The goal of the company is to enhance returns but reduce risks for clients via market timing. Currently, the company’s funds were invested into the Vanguard 500, an S&P 500 no-load and low-expense index funds (with the reminder in money market instruments). As time goes by, Sarah Wolfe who is the founder of this company think about increasing her equity exposure to 80% with the purchase of individual stock.
Strategies:
Firstly, Sarah Wolfe uses a market timing strategy based on two portfolios: the Vanguard Index and money market. In order to obtain the capital gains, once the company predicts the market value will rise, it will transfer its assets from the money market to the Index. The limit will up to a maximum 99% of total assets. On the other hand when the company expects the market value will decrease, it transfers the assets back from the Index to the money market instruments therefore to avoid the capital losses. Also the limit will down to a minimum of 50% of the assets. The strategy was quite successful, the report in the case study shows that in the January 4,1991,Beta Management had 79.2% of its $25 million invested in the Vanguard fund; Beta had also made money for its clients during a