Question

Recommend a two asset portfolio from the following four assets, assuming equal investment in each asset that will minimise risk.

JB-HI-FI Limited, GOLD ETF, Caltex Australia, All Ordinary index (MKT)

research the nature of the asset, come to an agreement on which combination would recommend pose the least if invested in equally.

a) Which two assets should be chosen and why

b) Highlighting any opposing viewpoints that were raised

Answer 1

a)JB HI FI limited and gold ETF would be two assets which would be chosen because there is an environment of uncertainty and consumer consumption is not going to stop so retail business is still in demand along with gold ETF which will provide with the hedge against such uncertainty.

b) Caltex Australia and all ordinary index are also lucrative options but they could not be selected because caltex Australia is high beta along with it represent overall high systematic market risk and all ordinary indexis represented of all the sectors of the economy which is not preferable at this point of time when there is high uncertainty and there is a contagian spread and global shutdown