portfolio diversification using financial derivatives
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Portfolio Diversification using Financial Derivatives. Presented by: Amro Abdu Middle East Head of Sales. What is Portfolio Diversification. - PowerPoint PPT PresentationTRANSCRIPT
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Portfolio Diversification using Financial Derivatives
Presented by: Amro AbduMiddle East Head of Sales
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- A financial management technique that aims to minimize the effect of a single poorly performing investment
in the portfolio by spreading out the risk among a balanced mixture of investments.
What is Portfolio Diversification
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Why Diversify
• “Don’t put all your eggs in one basket”
• Limit impact of poorly performing investment
• Increase exposure to multiple markets
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Guideline to diversification
• What are my investment goals? • What is my time frame to reach these
goals? • Can I afford to invest regularly? • What growth rate do I need to reach my
goals? • What is my risk tolerance to reach my
investment goals
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Types of Diversification
• Horizontal Diversification• Vertical Diversification
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Instruments of diversification
• Commodities • Stocks and stock indices• Forex
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What are CFDs?
A Contract For Difference is exactly that, it is a contract with an entity (broker) to exchange the difference between the opening value and the closing value of an instrument, whether that instrument is an individual equity, a bond, a future, option and so on.
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commodities
• Agriculture• Energy• Metals
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Agriculture CFDs
• Softs• London Coffee
London SugarLondon CocoaOrange Juice US CocoaUS Cotton No. 2US Sugar 11US Coffee "C"
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Soft Commodity Fundamentals
• Beginning Stock• Production• Imports• Total Supply• Demand (local Demand and Overseas)• Ending Carry over stocks
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Energy CFDs
• Oils• NYMEX WTI crude oil
Brent crude oil
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Major Energy Fundamentals
• Weather• Seasonality• API and DOE report (supply/demand)• Geopolitics• Opec
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Metals CFDs
• Metals• Gold
SilverCopperPlatinumPalladium
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Metal Fundamentals
• Gold: Central banks, Geopolitics, China and India, Inflation and Interest Rates
• Silver: Copper, Zinc, and lead production, photography market, India
• Platinum: Japan, automotive industry and the environment.
• Copper: Industry and construction, geopolitics
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Stocks CFDs• United
States• WallStreet
30US SPX 500US Tech 100
• Europe• Netherlands
All-ShareAustria 24Belgium 20Germany 160UK 350
• Spain 35
Italy 40France 250Switzerland 28
• Australia• Australia
500
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Indices• Europe• UK 100
Netherlands 25Finland 25 Norway 25 Denmark 20 Hungary 14France 40Germany 30Germany Mid-Cap 50 EU Stocks 50Spain 35Poland 20Italy 40Switzerland 25NEW! Sweden 30
NEW! Austria 20
• North America• WallStreet 30
US SPX 500US Tech 100US Small-Cap 2000NEW! Mexico 35NEW! Canada 60
• Australia• Australia 200
• Asia
• Hong Kong 40Japan 225NEW! India 50NEW! China H-SharesNEW! Singapore Blue ChipNEW! Korea 200
• Africa• NEW!South Africa 40
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Equity Fundamentals
• General Economic Activity• Interest rates• Inflationary Expectations• Political Consideration• Investor Attitudes• Innovation
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Forex
• 3.4 Trillion a day in volume• Leverage of up to 400:1• Low minimum capital requirements• 24 hours 5.5 days of trading• Transparency
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Forex Fundamentals
• Trade Balance• Wealth• Deficit/surplus• Interest Rates• Geopolitics
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Conclusion
• “Do not put all your eggs in one basket”
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Questions