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Investment Strategy Case Study: Mr. John City


Mr. John City, a 40-year-old IT consultant, intends to save his money after he retires at the age of 65. With his annual salary at $150,000 per year, Mr. John City is confident that it will increase by 2.0%p.a until he retires. Currently, he has $80000 in a small pension scheme. According to his financial manager, he can afford to contribute no more than a fixed amount of $15000 to his pension every end of the year until he retires. According to his financial manager, the pension can accumulate to around $1000000 by retiring. With this amount, he will buy an annuity that will generate an annual pension of approximately 20% of his salary in the final year of work. Thus, Mr. John City believed that this pension would help him live a reasonably comfortable retirement life. However, he also has a small interest-only mortgage with an outstanding value of $75000 in 15 years. Thus, he intends to pay this mortgage off with his savings in 15 years. As a result, Mr. City needs an investment strategy that will generate the returns to enable him to redeem his mortgage in 15 years and generate a pension pot of $1000000 by the time he retires in 25 years.


Investing is a popular topic of conversation, especially among those planning retirement. However, many people are unaware of how to prepare for retirement and the best retirement investing methods. Even for investors who have successfully grown their money for years, selecting proper retirement investing methods can be difficult (Tursunov, 2017). Besides, since there are many investment approaches, options, terminology, and concepts to pick from, a novice investor may feel bewildered and discouraged before starting. Nevertheless, different tactics may be required if an investor’s approach shifts from building a balance to investing for retirement income.

An investment strategy is a financial management phrase that relates to a particular financial plan, principles, and methods to assist an investor in selecting from a variety of investment options and building and maintaining a profitable investment portfolio. Financial professionals typically define investment strategy as a trade-off between risk and profit for investors. They are designed to help an investor choose a suitable project to deliver the best long-term return.

While some investors prefer to use an investment strategy that minimizes risk, others prefer to maximize expected returns by investing a large portion of their hard-earned money in risky assets; some investors often prefer the middle-of-the-road investment strategy as their preferred investment strategy. In regard to Mr. John City’s case study, this study will highlight the best investment strategy for Mr. City. The analysis will defines the plan and the project in which Mr. City can invest and enable him to redeem his mortgage in 15 years. This analysis will also present the asset proportions in dev equities, emerging equities, property, and commodities. Moreover, the assessment has presented the volatility control, trend, risk parity, and momentum investing calculations to show the most profitable projects for investment. Besides, by evaluating asset allocation principles, the analysis will provide recommendations for asset allocation.


Historically, the investment industry has concentrated primarily on security selection decisions, a concentration that has served as a diversion from another important source of additional value, namely asset allocation decisions. In light of previous crises, and given the inherent difficulties of producing additional value only through security choices, the traditional paradigm’s applicability has been called into question. The emphasis is turning to effective factor exposure management as the primary source of performance. By exploiting new asset classes or overlaying tactical management, today’s strategies are geared to deliver more targeted investor outcomes. Multi-asset investing solutions have grown increasingly popular among sophisticated institutional investors as part of this growing trend, concentrating on efficient risk premium harvesting across and within asset classes. Multi-asset investing strategies may be a strong tool for attaining an investor’s financial goals, but what works for one investor may not work for another. According to Cavaglia et al. (2022), the term “multi-asset investment strategy” refers to a strategy that includes investments in various asset classes. A multi-asset investing strategy always includes more than one asset class, resulting in a collection of assets that diversifies a portfolio by dispersing all available funds across many asset classes. As a result, they lower the risk of investing when compared to having a high concentration in a single asset type. However, like with any investment choice, it is critical to establish your objectives and then choose the best plan for achieving them.

Measuring a multi-asset strategy’s long-term performance over inflation and short-term volatility relative to simple Equity plus fixed-income reference portfolio seems to help the suitable investment strategy for Mr. John City. As described in the case scenario, Mr City intends to retire at the age of 65 and wants to save for his retirement. After reviewing the case study, it is evident that Mr. John’s yearly pay is $150000, and he is just 40 years old. For inflation, the overall wage has grown by 2.0 percent per year. As a result, Mr. City’s total compensation in his final year of retirement is estimated to be “[S 150000 + 25] = $246090.90. In this regard, it has been noted that Mr. City expects to receive state’s pension benefits. Fortunately, most defined contribution (DC) pension plans allow participants to select an investing strategy for their contributions.

With the opportunity to select an investing strategy, multi-asset investment with embedded asset allocations, on the other hand, are an option. Multi-asset strategies are designed to help investors achieve their long-term objectives. Many underlying investment managers also use inherently long-term investing approaches. Value strategies, for example, might take a whole market cycle to produce fruit. According to Xing et al. (2018), value investing is a superior strategy for investors to generate a higher return over the long run.

To put it another way, investors typically have diverse aims and viewpoints when it comes to their investments, and most of them use different techniques to achieve their objectives. In this scenario, Mr. John City can pursue a growth investment plan to gain capital appreciation. According to Shah et al. (2017), growth investing is an investment strategy that focuses on capital appreciation for investors. In this case, the entire investment leads to increased average growth, resulting in a higher return on the overall investment made by investors.

In a healthy economy, growth stocks do the best throughout the maturity stage of the market cycle. Many investors are drawn to growth investing because buying shares in new firms may yield substantial profits. On the other hand, such investors are generally untested and entail considerable risk. When it comes to investing, today’s investors have the option of picking from a wide range of asset types. For those who want to invest for a long time, they utilize a growth investment approach where they focus on companies with persistent, above-average profit and revenue growth. These investors are ready to pay a higher price for a stock today because they believe it will expand quicker in the future. Thus, they pay a higher price in exchange for long-term future profits growth. According to the case study, Mr City desire to generate returns in 15 years’ time. Besides, he is willing to risk atleast a half of his money in the investment. As a result, this plan is ideal for Mr. City, since he is looking for a long-term investment strategy to help him pay down his mortgage. Furthermore, it is an investing strategy and style to expand investors’ money. As a result, with this strategy, Mr.City will have amassed a $1,000,000 pension fund by the time retires.

The sophisticated form of the growth investment plan is the momentum investment strategy. According to Wu, Ma, and Yue (2017), it comprises taking advantage of existing price movements hoping that momentum will continue to increase in the same direction. Momentum investing represents the systematic approach of buying stocks and securities at high risk for the short and long term. Li et al. (2018) commented that momentum investing strategy defines the strategic approach of investment that gives security for the future in terms of risk in a momentum market. Mr. John City is a professional and salaried employee, and the risk-tolerance ability of the person is quite better as per the case scenario analysis. Therefore, it can be said that the momentum investing approach can also provide a better return to Mr. City; however, it enhances the risk that is not preferable at the age of retirement. In this context, the market growth in momentum investment and the trend of different categories have been analyzed. These categories include dev equities of US 500, commodities Of Sugar, the fixed income of US Corporation, Emerging equities of China, and property of UK. The rate of momentum investing represents a negative momentum of the US 500 market until 2003. However, the momentum market was at a positive growth from 2003 to 2007 and 2009 to 2020, where the highest momentum has been seen in the financial year 2020. The category of emerging equities has represented the same momentum where the fixed income of US Corporation refers to positive momentum in this context. In addition to that, it denotes that the property of the United Kingdom represents a positive momentum where the category represents a negative momentum from 2007 to 2009. The average growth in the close price of these categories includes USD 290865 for the “US S&P 500” USD 1096.23 for emerging communities of China.

Furthermore, the average growth in sugar commodities was USD 156.51, US Corporation was USD 249.20, and UK property was USD 2208.27. In the words of Kang et al. (2018), the investable project that provides the highest growth in relation to the market return indicates the highest risk factor of the project. It shows an influential growth within the investable projects on which the most profitable project is dev equities Of US 500. In addition to that, it has also been observed the risk proportion of the US S&P 500 is the highest as per the risk parity of these projects. In this context, the risk parity of different segments represents that the risk parity of dev equities and emerging equities are 53.94 and 33.11, respectively. Moreover, in the context of fixed income Of the US Corporation, the risk parity is 15.79 and 46.99 in the context of sugar commodities.

The market growth in momentum investment, and the trend of various categories, have also been examined in this case. Development equities of the US 500, sugar commodities, the fixed income of US corporations, emerging equities of China, and UK property are among these categories. The rate of momentum investing indicates that the US 500 market had a negative momentum until 2003. On the other hand, the momentum market had positive development from 2003 to 2007 and 2009 to 2020, with the strongest momentum in the financial year 2020.

Emerging stocks have shown the same trend, but US corporate fixed income has indicated a positive momentum in this case. Additionally, it suggests that the property of the United Kingdom indicates a positive momentum, whereas the category shows a negative momentum from 2007 until 2009. Also, from 2007 to 2009, the property of the United Kingdom indicates a positive momentum, whereas the category shows a negative momentum. The “US&P 500” has had an average price increase of USD 2908.65, while developing Chinese communities have seen an average price increase of USD 1096.23. In addition, the average growth in sugar commodities was USD 156.51, US corporations were USD 249.20, and UK property was USD 2208.27. According to Kang et al. (2018), the investable project with the largest growth in relation to the market return has the highest risk component. It demonstrates a significant increase in investable ventures, with dev equities of US 500 being the most profitable. Additionally, according to the risk parity of these projects, the risk percentage of the US S&P 500 is the largest. In this regard, the risk parity of various sectors shows that dev equities and emerging stocks have risk parities of 53.94 and 33.11, respectively. Furthermore, the risk parity of the US Corporation’s fixed income is 15.79 and 46.99 in the context of sugar commodities.

The volatility control of these commodities is the influencing variable that indicates the most suited project for investment. In this regard, it has been discovered that the volatility management of various categories also symbolizes the high beta stock trading portfolio. The term “volatility control” refers to the trend of a specific level of leverage growing or decreasing while the portfolio remains near the objective (Tursunbaevich and Mamatovich, 2019). The closing price trend and the volatility control proportion in relation to the stock price reflect a distinct investment plan perspective. In this case, the maximum volatility control rate in terms of sugar commodities is 0092, according to the calculations. In addition, as a fraction of distinct segments, the volatility control rate of other categories comprises 0.03, 0.06, 004, and 007. As a result, it can be argued that Mr. John City can maintain his risk-parity investing strategy by evaluating market trends and momentum. It shows the highest rate of return on investment and allows Mr. John to retire at the age of 65 with a pension pool of $ 1000,000.


One of the most critical aspects in determining investing performance is asset allocation. According to many financial experts, asset allocation is critical in determining investment portfolio performance. Asset allocation is a technique for balancing risk and return in an investment portfolio by altering the amount of each asset in the portfolio based on the investor’s risk tolerance, goals, and time horizon (Idzorek and Mulvey, 2020). When it comes to building and managing your investment portfolio, asset allocation is crucial. After all, it is one of the most important aspects in determining your total returns—even more so than picking specific stocks. The challenge for investors is determining a long-term strategic asset allocation appropriate for their needs and the complexity and fluctuations of the global capital markets.

Asset allocation is an investing technique for balancing risk and return by deciding how much of your portfolio or net worth to invest in different asset types. It essentially entails the diversification of one’s investment portfolio. The ultimate aim of effective asset allocation is to optimize a portfolio’s risk-adjusted returns while tailoring its growth potential and risks to the requirements and ambitions of each investor (Xing, Cambria, and Welsch, 2018). For most investors, a well-thought-out asset allocation strategy is far more essential than picking particular stocks. It is crucial to get right and an area where many investors underperform. This is due to the difficulty of picking particular stocks that beat the market, but merely balancing your assets between local and international equities and other asset classes helps to decrease risk and preserve growth across varied market circumstances dramatically. However, achieving the best balance of risk and return in an investment portfolio requires mixing many potentially volatile individual assets, such as Equity, in a specified proportion.

Various asset allocation techniques have been created to determine the appropriate blend of varied investments that maximize risk and return in an investment portfolio. The two main asset allocation strategies include strategic and tactical asset allocation. Strategic asset allocations are used to allocate long-term strategies. However, because capital markets move in cycles, there may be short-term chances to improve a portfolio’s risk/return relationship by temporarily modifying strategy allocations. The tactical asset allocation modifications, on the other hand, are intended to give recommendations on portfolio weightings in the short run. However, both strategies emphasize diversification to reduce risk and improve portfolio returns


The most crucial part of the investment process is determining a strategic asset allocation. However, based on the investment strategy analysis, the investment in “US 500” development equities may be recommended by Mr. John City since it provides the best return. Based on Firmansyah and Devi’s (2017) arguments, it can be said that Mr. City can be strongly affected if he maintains his investing plan according to asset allocation principles. The origin, the foundation, the source, or the substance upon which things develop and expand may all be defined as principles. They are vital in investing since they provide a financial strategy structure. The principles describe how to set up and maintain asset allocation so that Mr. John gets the best possible return.

Recommendations for maintaining asset allocation

Recommendations for maintaining asset allocation.

Source: (Firmansyah and Devi 2017),


All asset allocation cornerstone ideas revolve around the golden principle of market efficiency. Market efficiency refers to a project’s ability to effectively analyze the market and generate a greater return than other ventures. In this scenario, the average growth of US S&P 500 stocks is the greatest, indicating an important asset allocation aspect. According to Tursunbaevich and Mamatovich (2019), investors should study the market trend and evaluate market efficiency before investing in a project. It is not easy to use asset allocation without market efficiency; instead, one would probably focus on securities selection. However, when an investor is presented with two investments with similar expected returns but differing degrees of risk, modern portfolio theory suggests that the investor should choose the investment with the lower risk. As a result, Mr. John may invest in the US S&P 500 since it provides the best rate of return, allowing him to save for his retirement.


Personal preferences for risk assumption, according to this principle, play a critical influence in deciding one’s readiness to tolerate risk. Schoenmaker and Schramade (2018) define risk profile as the project’s risk factor, with a high-risk project yielding a higher return than a low-risk one. An individual’s ideal portfolio is based mostly on risk tolerance willingness, capability, and necessity. As a result, after risk tolerance has been established, an individual may identify their ideal asset mix to optimize the return potential of their portfolio. In the case provided, the risk factor of the US S&P 500 is the greatest, indicating that this category can give Mr. John the best return. As a result, it is possible to advise Mr. City to invest in this project, which would provide him with a greater opportunity to save for his retirement.


According to Brunel, Idzorek, and Mulvey (2020), asset allocation is the process of distributing a portfolio’s assets among multiple asset classes to get the best predicted overall rate of return for the degree of risk one is prepared for to take. As a result, the first step is to understand the reason for investing and your goals. Focus on defining and prioritizing your unique goals and needs while determining them. It is also important to make sure the goals and needs are reasonable, attainable, and quantifiable.

Normally, average growth, trend, and momentum show a project’s financial health, significantly impacting investors. It can be recommended to Mr. John that the US S&P has the highest average growth and return margin. Furthermore, the trend and momentum show a positive aspect that aids Mr. John in achieving his financial objectives.


Based on this assessment, it is evident that the process of constructing a diversified, multi-asset class portfolio usually consists of two parts. The first phase is to build a diversified, multi-asset investment portfolio, which entails making implementation decisions about which investments will be utilized to carry out the planned allocations. On the other hand, the asset allocation decision can relate to both the process and the outcome of choosing long-term (strategic) exposures to the various asset classes (or risk factors) that comprise the investor’s opportunity set. On the other hand, asset allocation is the first and most important step in converting a client’s circumstances, objectives, and restrictions into an appropriate portfolio for attaining the client’s objectives while staying within the client’s risk tolerance.

Nevertheless, this case study analysis shows Mr. John City can continue to invest in the project with a growth investment plan. In this regard, it has been noted that the average growth of dev equities in the US 500 is the greatest. Furthermore, with a risk parity of 53.94 percent, this category has the largest risk percentage. It alludes to a condition in which Mr. City can earn the best return from the US 500, which is also a good investment.


Brunel, J.L., Idzorek, C.T.M. and Mulvey, C.J.M., 2020. Principles of Asset Allocation. Portfolio Management in Practice, Volume 1: Investment Management, p.211.

Kang, Y.Q., Xie, B.C., Wang, J. and Wang, Y.N., 2018. Environmental assessment and investment strategy for China’s manufacturing industry: A non-radial DEA based analysis. Journal of Cleaner Production175, pp.501-511.

Li, Z., Zhao, H., Liu, Q., Huang, Z., Mei, T. and Chen, E., 2018, July. Learning from history and present: Next-item recommendation via discriminatively exploiting user behaviors. In Proceedings of the 24th ACM SIGKDD International Conference on Knowledge Discovery & Data Mining (pp. 1734-1743).

Tursunov, B.O., 2017. Principles and functions of management of production capacity. Вопросы управления, (3 (46)), pp.174-178.

Schoenmaker, D. and Schramade, W., 2018. Principles of sustainable finance. Oxford University Press. Shah, R., McMann, O. and Borthwick, F., 2017. Challenges and prospects of applying asset management principles to highway maintenance: A case study of the UK. Transportation Research Part A: Policy and Practice97, pp.231-243.

Tursunbaevich, B.B. and Mamatovich, R.A., 2019. Basic principles of investment in the economy of Uzbekistan. South Asian Journal of Marketing & Management Research9(8), pp.21-27.

Xing, F.Z., Cambria, E. and Welsch, R.E., 2018. Intelligent asset allocation via market sentiment views. ieee ComputatioNal iNtelligeNCe magaziNe13(4), pp.25-34.

Wu, H., Ma, C. and Yue, S., 2017. Momentum in strategic asset allocation. International Review of Economics & Finance47, pp.115-127.

Cavaglia, S., Scott, L., Blay, K. and Hixon, S., 2022. Multi-Asset Class Factor Premia: A Strategic Asset Allocation Perspective. The Journal of Portfolio Management.


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