New Opportunities Fund, Case Study Example

New Opportunities Fund

New Opportunities Fund are the investment funds with specific objectives of creating a pool of venture capital to grow and expand their corporations, provide its shareholders with investment vehicles to maintain their funds in order to maximize their returns. This is done by paying attention on stocks that offer best value opportunities in the market. The other strategy is by avoiding on stocks are very expensive yet they look great on surface. The fund aims mainly to invest on the best opportunities that may arise across the market.

Recommendations on the desired cash position of the fund

New Opportunities Fund aims at investing mainly on the companies whose securities in the US market capitalization are less than $ 4 billion. Since the main objective of the fund is to realize long term capital growth, the fund will invest mainly on companies in both UK and US that the manager finds it to be undervalued. The companies that need to be invested in are those that have mispriced growth opportunities and who revenues and earnings are dependable. They will carry 50-60% and 20-40% respectively. Those companies that are believed to have potential to grow get 5-20% of the total investment portfolio of between 100- 150 stocks.

Recommendations on the distribution of funds among areas of the world and industries

Fund managers aim at finding out companies who actual values have not been on the market valuation and invest in them. Their underlying value according to the managers’ rigorous analysis should be convincing. This will determine the weightings of portfolio according to its balance sheet and cash flow statements. It is the conviction of managers that determine whether an investment should be made or not rather than the normal weighting within index. A detail analysis of the company’s statements of cash flows is the other thing that advises the investment decision taken. This normally provides the position of the company’s funding. Challenges that the company faces both within the industry and within the cyclical and structural of the entire economy.

Some of the most favourite companies that are good for such investment are found in the financial sector of the two countries that is the US and UK. This is because of the inability for most fund manager to determine whether most of these companies are expensive or have their stocks sold at a rate that is fairly manageable by most investors. The other key industry that holds most of the companies that are good for such investment is the energy sector and more specifically the oil and exploration companies. These companies have their assets mostly not disclosed fully since they are underlying assets of other securities. This makes it hard for most of the investors to realise and determine the exact companies. In conclusion it can be argued that most of the fund managers have a very hard task finding out those companies that are worth investing in making the whole analysis of companies a very tiresome and rigorous exercise.