Interpreting the returns of Equity Funds – 50 Marks
Having completed your Graduate Degree from Cambridge, you have just got a job at a small investment advisory firm. Your firm recommends investment funds to Self Managed Super Fund (SMSF) clients based on their risk and return characteristics.
Your duties include the preparation and presentation of data for the senior investment advisers in order to assist them in the selection of portfolio investments to be recommended to clients.
Your supervisor has just asked you and three other members of your team to analyse the risk and return characteristics of three funds:
1. The “Top 40” fund - invests only in the Top 40 firms by market capitalisation that are listed on the ASX
2. The “Next 40” fund - invests only in the firms that are ranked from 41 to 80 by market capitalisation on the ASX
3. The “Small Cap” fund - invests in companies ranked 81 and lower. These are basically smaller companies and consist of all the remaining companies that are ranked, by market capitalisation, outside the top 80.
You have been given quarterly returns of each of these funds for the past 10 years and asked to organise the data in a manner that will facilitate a better understanding of their risk profiles.
The data is presented later in this assignment and will also be available in soft format for your convenience.
As an example, if the quarterly return of a fund is 10 %, it means that if you invested $100 at the beginning of that quarter in the fund, your investment would, at the end of that quarter be $100 + $ 2.50 = $ 102.50

Learning Outcome Assessed: a,b,c,e?Weighting: 25% (Report 15% + Presentation 10%) Written Report Case Study Analysis (2000 words)
Your supervisor has given your team the following tasks:
Part A – Written Report – 3 x 10 Marks = 30 Marks
1. Organise the data into appropriate class intervals and present the following:
• A histogram of the frequency distribution
• An “Ogive” of the cumulative frequency distribution
2. Estimate the Mean, Median, Range, Standard Deviation and Coefficient of Variation of the returns of each of the three funds.
3. Discuss your views on the risk and return characteristics of the three funds.
Part B – Presentation – 20 Marks
1. Present your views on the risk and return characteristics of the three funds in a clear and concise manner describing how you estimated the statistical parameters above and explaining the reasons for your recommendations.
Company Policies / Instructions:
• You are required to present as a team and you may use a power point document to facilitate your presentation if required. The presentation must have no more than 4 slides.
• Each member of the group must contribute equally to the discussion.
Data File:
Business Statistics Assignment Data File - Term 4 2014
ID Ref Year QUARTER Top 40 Next 40 Small Cap
(%) (%) (%)
1 1 Q1 5.26 8.43 0.05
2 Q2 8.47 3.06 11.24
3 Q3 11.38 7.38 7.08
4 Q4 1.80 4.07 15.87
5 2 Q1 6.10 7.27 6.12
6 Q2 8.17 2.91 3.51
7 Q3 5.04 10.43 5.71
8 Q4 4.88 15.69 1.38
9 3 Q1 3.83 5.71 15.89
10 Q2 13.28 3.81 20.98
11 Q3 6.63 2.95 4.45
12 Q4 4.55 6.13 3.24
13 4 Q1 3.79 9.59 6.83
14 Q2 3.87 2.29 23.83
15 Q3 1.99 5.14 4.73
16 Q4 5.47 6.25 5.03
17 5 Q1 5.57 3.12 6.19
18 Q2 7.03 6.73 5.19
19 Q3 4.11 4.69 17.86
20 Q4 2.55 9.80 4.25
21 6 Q1 3.20 4.99 3.88
22 Q2 7.10 13.22 21.80
23 Q3 7.60 3.85 6.74
24 Q4 8.21 4.78 41.20
25 7 Q1 1.39 11.95 7.04
26 Q2 7.49 6.69 6.35
27 Q3 3.63 4.84 9.27
28 Q4 0.41 3.85 15.70
29 8 Q1 2.10 7.33 2.12
30 Q2 3.38 1.30 16.85
31 Q3 8.26 8.96 6.25
32 Q4 9.73 12.44 3.12
33 9 Q1 6.38 9.56 2.07
34 Q2 1.73 1.85 3.06
35 Q3 0.33 5.14 0.95
36 Q4 2.74 10.35 2.69
37 10 Q1 5.13 5.59 2.17
38 Q2 3.16 3.93 11.79
39 Q3 2.55 8.02 6.49
40 Q4 12.40 9.09 3.98