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Portfoilio

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1. INTRODUCTION 1.1. INDUSTRY ALLOCATION
The assets, combined in this portfolio, have been chosen from three different industries – banking, retail and drug manufacturing industry. Each industry has its own characteristics and distinguishes from one another, for the purpose of creating a diversified portfolio. Factors, affecting the banking sector and Barclays Bank (the chosen asset) are related to the current economic crisis, interest rates and the policy led by the government (either encouraging spending or saving). On the other hand the retail industry, represented by Marks and Spencer in this portfolio, is affected by the current economic climate in term of disposable and discretionary income. The final industry, drug manufacturing, which is most dependent on research and development, which incur high input costs and require a lot of testing (meaning the business process is time-consuming), is represented by GlaxoSmithKline. The three industries can be affected by completely different factors in nature.

1.2. PORTFOLIO CONSTRUCTION
This portfolio was constructed by stocks, listed only on the London Stock Exchange (LSE), with no interaction with emerging markets. Although international diversification is not present, the unsystematic risk is lower due to the investment in already developed market (LSE), allowing enough liquidity and establishing fair price of the assets. The three companies (Barclays Bank, Marks and Spencer and GlaxoSmithKline) are all blue chips, with none of the stocks being defensive, due to the nature of the recent economic cycle (Orman, M.M., Duggan, T.E., 1999). The assets have been chosen after a process of screening in order to create a diversified portfolio. In this process was used top-down analysis in term of industry analysis (industry attractiveness as Barclays Bank have been an established company in one of the most profitable

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