GROUP MEMBER APPRAISAL FORM

The bases of this evaluation is your group member’s contribution and involvement in this
assignment.

Group members will be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted
the group in advance and came to an alternative arrangement that the majority
of group members were happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative
arrangements with other group members.
 Group member assigned tasks were only partly completed or poorly
completed.
 Group member did not contribute to the group effort or volunteered for tasks.
0%  Group member attended few meetings and made no contribution to the
assignment,

Name of student: ________Chong Yew Fai________________

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise
each person named by circling one of the totals shown below (i.e. 100%, 50% or 0%.)

Name of Group Member Assessment

1) Isaac Loo Qu Heng 100% 50% 0%

2) Jass Lee Chun Xian 100% 50% 0%
3) Tan Chew Hsien 100% 50% 0%
4) Too Sheu Sen 100% 50% 0%

Note:

Failure to submit a Group Member Appraisal Form will result in a ZERO appraisal being
recorded against your name.
 GROUP MEMBER APPRAISAL FORM
The bases of this evaluation is your group member’s contribution and involvement in this
assignment.

Group members will be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted
the group in advance and came to an alternative arrangement that the majority
of group members were happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative
arrangements with other group members.
 Group member assigned tasks were only partly completed or poorly
completed.
 Group member did not contribute to the group effort or volunteered for tasks.
0%  Group member attended few meetings and made no contribution to the
assignment,

Name of student: ________Isaac Loo Qu Heng ________________

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise
each person named by circling one of the totals shown below (i.e. 100%, 50% or 0%.)

Name of Group Member Assessment

1) Chong Yew Fai 100% 50% 0%

2) Jass Lee Chun Xian 100% 50% 0%
3) Tan Chew Hsien 100% 50% 0%
4) Too Sheu Sen 100% 50% 0%

Note:

Failure to submit a Group Member Appraisal Form will result in a ZERO appraisal being
recorded against your name.

GROUP MEMBER APPRAISAL FORM

The bases of this evaluation is your group member’s contribution and involvement in this
assignment.

Group members will be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted
the group in advance and came to an alternative arrangement that the majority
of group members were happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative
arrangements with other group members.
 Group member assigned tasks were only partly completed or poorly
completed.
 Group member did not contribute to the group effort or volunteered for tasks.
0%  Group member attended few meetings and made no contribution to the
assignment,

Name of student: ________Jass Lee Chun Xian________________

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise
each person named by circling one of the totals shown below (i.e. 100%, 50% or 0%.)

Name of Group Member Assessment

1) Chong Yew Fai 100% 50% 0%

2) Isaac Loo Qu Heng 100% 50% 0%
3) Tan Chew Hsien 100% 50% 0%
4) Too Sheu Sen 100% 50% 0%

Note:

Failure to submit a Group Member Appraisal Form will result in a ZERO appraisal being
recorded against your name.

GROUP MEMBER APPRAISAL FORM

The bases of this evaluation is your group member’s contribution and involvement in this
assignment.

Group members will be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted
the group in advance and came to an alternative arrangement that the majority
of group members were happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative
arrangements with other group members.
 Group member assigned tasks were only partly completed or poorly
completed.
 Group member did not contribute to the group effort or volunteered for tasks.
0%  Group member attended few meetings and made no contribution to the
assignment,

Name of student: ________Tan Chew Hsien________________

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise
each person named by circling one of the totals shown below (i.e. 100%, 50% or 0%.)

Name of Group Member Assessment

1) Chong Yew Fai 100% 50% 0%

2) Isaac Loo Qu Heng 100% 50% 0%
3) Jass Lee Chun Xian 100% 50% 0%
4) Too Sheu Sen 100% 50% 0%

Note:

Failure to submit a Group Member Appraisal Form will result in a ZERO appraisal being
recorded against your name.

GROUP MEMBER APPRAISAL FORM

The bases of this evaluation is your group member’s contribution and involvement in this
assignment.

Group members will be appraised using the following basis:

100%  Group member attended all group meetings or if unable to attend, contacted
the group in advance and came to an alternative arrangement that the majority
of group members were happy with.
 Group member contributed to group discussion.
 Group member always offered to help or volunteered for tasks.
 Group member had assigned tasks completed on time.
50%  Group member missed group meetings without making alternative
arrangements with other group members.
 Group member assigned tasks were only partly completed or poorly
completed.
 Group member did not contribute to the group effort or volunteered for tasks.
0%  Group member attended few meetings and made no contribution to the
assignment,

Name of student: ________Too Sheu Sen________________

Instructions:

Place the name of each of the members in your group in the space provided below. Appraise
each person named by circling one of the totals shown below (i.e. 100%, 50% or 0%.)

Name of Group Member Assessment

1) Chong Yew Fai 100% 50% 0%

2) Isaac Loo Qu Heng 100% 50% 0%
3) Jass Lee Chun Xian 100% 50% 0%
4) Tan Chew Hsien 100% 50% 0%

Note:

Failure to submit a Group Member Appraisal Form will result in a ZERO appraisal being
recorded against your name.

Semester: 3 Course Code & Title: BBMF3113 Case Study in Finance and Investment

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

 PLAGIARISM DECLARATION STATEMENT

We confirm that we have read and shall comply with all the terms and condition of Tunku Abdul
Rahman University College’s plagiarism policy.

We declare that this assignment is free from all forms of plagiarism and for all intents and purposes is
our own properly derived work.

We further confirm that the same work, where appropriate, has been verified by anti-plagiarism

software _ _ (please insert).

Name (Block Capitals) Regn No. Signature

1. CHONG YEW FAI 19WBR07746 CYF

……………………… …………………………… ……...……………

2. ISAAC LOO QU HENG 19WBR07778 LQH

……………………… …………………………… ……...……………

3. JASS LEE CHUN XIAN 19WBR07779 LCX

……………………… …………………………… ……...……………

4. TAN CHEW HSIEN 19WBR07866 TCH

……………………… …………………………… ……...……………

5. TOO SHEU SEN 19WBR02558 TSS

……………………… …………………………… ……...……………

PROGRAMME : RFI

TUTORIAL GROUP :5

DATE : 18/02/2021

FACULTY OF ACCOUNTANCY, FINANCE AND BUSINESS

COURSEWORK FEEDBACK FORM FOR WRITTEN REPORT

 COURSE CODE/ COURSE TITLE: BBMF3113 Case Study in Finance and Investment

NAME OF STUDENT(s): ID No:

1)Chong Yew Fai 78% 19WBR07746
2)Isaac Loo Qu Heng 78% 19WBR07778
3)Jass Lee Chun Xian 79% 19WBR07779
4)Tan Chew Hsien 79% 19WBR07866
5) Too Sheu Sen 78% 19WBR02558
PROGRAMME: RFI

YEAR OF STUDY: 3 ACADEMIC YEAR: 2019/2020

SEMESTER: 3
GROUP NO:5
COURSEWORK NO: 1/2/3 NATURE OF MARKS ALLOCATED:
COURSEWORK: Group
assignment /100

COMMENTS :

1) Q3 – Rather brief answers. More can be discussed on Larry Puglia’s investment

style.
2) Provide more citations and references to support your discussion.
3) Use only UK English throughout the report.
4) Need to label your appendices properly.
5) Overall, a good report.

Student Date: Lecturer/Tutor’s Date:

Acknowledgement: Signature: CYP 2/3/2021

Note: This form must be submitted together with the assessment grid/grading criteria and
Turnitin report for the coursework.

Case Study 1
1.1 What is the efficient market hypothesis? (374 words)

Efficient Market Hypothesis (EMH) believe that every existing securities price in the capital
market are fully influence by the relevant information in the markets. EMH are widely
accepted by the financial economists but not universally. Assuming the EMH Theory is true,
which means it will be impossible for anyone to beat the market even you are an expert
because all of the current prices of the securities are already at their fair value because it is
fully reflected by every accessible information in the market, which means there are no
securities in the market are undervalued or overvalued.

In the EMH theory, the economists have differentiated it into three difference level of market
efficiency according to the different information uses to determine the current price. The first
level will be the weak form, weak form assume that the current prices of the securities are
fully reflected by all the past prices, which means that technical analysis could not do much
in weak form because the current price already reflect to it. In weak form, the prices today
will be moved in a random direction instead of repeating the past patterns. The second level
will be the semi-strong form. In semi-strong form, the current prices for the securities are
fully reflected by the past prices and also all the information that release into the public. The
public available information such as annual reports of a company are already included and
reflected in the current securities price. In the semi-strong form, both technical and
fundamental analysis are unable to help the investor because the current price already
reflected on it. The third level will be the strong form. In strong form, it assumes that the
current securities price is fully reflected on every possible information that available in the
market no matter it is public information or private information that did not disclose to the
public. In this kind of situation, there will not be a single information that can gave the
investor an advantage because every information had already reflected by the securities price.
An economist stated that in this kind of market, there will only be investor with luck or
without luck, there will not be a clear winner in this kind of market.

1.2 What does it imply for the performance of mutual funds? (290 words)
In an EMH market, performance of mutual fund is unlikely to beat the market because the
market already reacted to every possible information in the market which include the research
of the fund manager because their information had been included. As Nobel Prize-winning
economist Paul Samuelson stated that all the existing current stock prices are selling in
discounted value below their intrinsic value, which mean every stock are more or less the
same from each other. Passive investor can simply choose a stock randomly and the result
will more of less the same as choosing a stock precisely. For example, Forbes magazine came
out with a portfolio in June 1967 that contain 28 equally weighted stocks selected by
throwing darts. After about 16 years later, when Forbes retired the feature article, initially the
portfolio only worth $28,000 with $1000 on every stock but now it is worth around $131,698
with about 9.5% compound rate of return. The rate of return from this portfolio beats the
averages return from the market and almost all the mutual funds in the market. The purpose
of this test is to prove that Paul Samuelson is true, no matter what stock you choose in the
market the result will more or less the same. After this experiment, Forbes concluded that
with the help of luck, sloth can also beat brains in the stock market. Despite the explanation
of EMH and the result of the tests, fund managers like Larry Puglia which outperform the
markets are still exist out there. Malkiel believe that those who beat the market are just lucky
winner that keep getting head in a coin-tossing contest. Malkiel suggested that those portfolio
managers that outperform the markets had some help from their luck.
2. How well has the Blue-Chip Growth Fund performed in recent years? In making the
assessment, what benchmark(s) are you using? How do you measure investment
performance? (727 words)

Based on the case study, the Blue-Chip Growth Fund has performed well in the recent years.
The summary had shown that the fund had an average annual total return of 10.12%
compared to the return of S&P 500 Index which only has 9.12%. (Appendix 1) In Exhibit 3.2,
it states that the performance of $10,000 growth performance from 6/6/2006 to 6/6/2016. We
can see that the $10,000 has grown to $24,154 with 10 years return which is 241.54%
(24,154/10,000 x 100). Based on the trailing total return among 10 years, we could see that
the fund has outperformed the performance of S&P 500. Besides that, Morningstar also gave
a five-star rating for the fund’s in the five-year performance and also placed it in the top 10%
of 1285 mutual funds in the large-cap growth category.

We are using the benchmarks which include TRP blue chip growth funds itself, S&P 500
index and Large-Cap Growth Category. Based on the 10-years return performance on a
$10,000 initial capital, the blue-chip fund has generated approximately $24,000. The S&P
500 has generated an approximate $20,500 return and the large-cap growth fund has
generated about $19,500 return. (Appendix 2) We can also use the trailing return for the three
funds as a benchmark. In comparing the trailing return for the three funds, we will use the
trailing return from 1-years to 15-years. (Appendix 3) The Blue-Chip Growth Fund has a
trailing return ranging between 0.88% to 6.27%. The S&P 500 Index has a trailing return
which ranged between 3.02% to 5.53%. The Large-Cap Growth Fund has a trailing return
ranging between -1.38% to 4.8%. Furthermore, we also can use the Morningstar performance
as a benchmark. (Appendix 4) The average total return of Blue-Chip Fund is between 11.34%
to 9.11% between 1-years to 10-year. The average total return for S&P 500 is between
15.43% to 7.24%. The average total return of Large-Cap Growth Fund is between 10.46% to
7.52%. Hence, these indicators above could be the important benchmarks when it comes to
evaluating the fund’s performance.

We measure the investment performance by looking at the long-term and short-term

performance. Short-term performance will be less than a year while long-term will be more
than 1 year. By this measurement, we can look into the total return for both performances.
The TRP Growth Fund objective is for long-term so, we can see that in the short-term
performance, the other two performances are better but in the long-term TRP is still
performing well among the others. By comparing the performance of long-term and short-
term, investors can do their investment wisely and make their own decision.

Next, we could measure the investment performance by using the Net Asset Value (NAV)
method. NAV is the value that states in the proportion of shares or the unit of the fund on a
specific date or time. NAV is calculated based on total assets minus total liabilities divided by
the outstanding shares. The performance is measured as the increase or decrease in NAV
including the dividend and capital gains. Investors may compare the NAV in the beginning of
the year and the NAV in the end of the year to see the difference of the value to determine the
funds performance. Some mutual funds often pay out dividends from their sold assets.
Therefore, the regularly paid out of income and gains will also decrease the NAV and will
not reflect in the absolute NAV values when compared between two dates. (Appendix 5)

Annual total return can also help to measure investment performance. The total return is the
actual rate of return of an investment over a period of time. It includes the interests, capital
gains and dividend distributions over a period. Annual total return is also considered as a
measurement because it reflects the true growth of the funds over time. This is because the
total annual return is the most common timeframe during evaluating the performance of the
funds. It is also important to evaluate the whole portfolio but not just one return metric when
determining an increase in value. It also helps investors to forecast the potential return of the
investment funds. It could be an investment tool to grow your retirement funds since it is
investing in the blue chips stocks which are growing constantly and more stable which could
bring you some returns in long-term performance.
3.1 What would Puglia say in response to claim that his success is luck? (315 words)

Malkiel said that a 'random walk' preceded the stock market, meaning that the potential price
movement is uncorrelated to both the past or current market movements. Malkiel must be like
betting to beat the market. As an example, he used coin tossing game if there are a thousand
players in this game, then half of them will be disqualified in the first round and so on until
just 8 players remain in the seventh round. He indicated that the few managers of the
celebrity portfolio (for example, the remaining 8 coin flipping game players) might be
identified as lucky.

In addition, some researchers believed in an efficient market theory (EMH) and concluded
that all market knowledge was productive and easily mirrored in share prices. The scholars
said it will be difficult to beat the market if the Efficiency theory was right. "One of several
economists stated, "We would notice fortunate and unfortunate investors in such a market,
but we would not find any outstanding fund managers who could beat the market
continuously.

The outperformance of Larry Puglia has defied traditional academic hypotheses, but this is
not a luck. While Malkiel and traditional academic theories state that it is difficult to beat the
market, it was only a lucky one. However, several studies showed the contradictory
anomalies of EMH, several facts such as lower P/E multiples had better results than higher
P/E multiples, and positive stock return serial correlation suggests that these anomalies do not
represent a random price and return walk. This shows that it was possible to beat the
competition and Puglia had the investment ability to do it. The performance of Puglia,
however, was not luck. His performance was based on his investment approach and
perceptions. Every penny he earned is the result of his sweat and tears. I believe Puglia would
say that his success is the result of his hard work.

3.2 What is his investment style? (164 words)

The investing style of Puglia was to identify businesses with reliable, sustainable growth in
earnings per share (EPS) and keep them for a lengthy time. Long term capital accumulation
was the key focus. Puglia is investing in large and medium-sized firms, which he claims will
produce over-average increases in profits. Puglia would analyze the company's increasing
market share and market value, the company's strategic advantages, the company's
fundamental research and the company's seasoned leadership to determine its investment.
Firstly, the demand for the product of the business and the prospects for future development
of the market will be measured. Next, the companies' sustainable competitive advantage will
be identified Third, he would look at the fundamental analysis of the company, such as
above-average growth in profits, steady growth in margins, good free cash flow and ROE.
Last, he would search for the skill of the business management. Puglia also continues to look
for new studies, economic statistics and other managers with some strong past record.
4. Suppose that you are an advisor to wealthy individuals in the area of equity
investments. In 2016, would you recommend investing in Puglia’s Blue-Chip Growth
Fund and why? (645 words)

Yes, it is advisable for them to invest in Puglia’s Blue-Chip Growth Fund. First, Larry Puglia
investing style had clearly shown that he’s able to achieve something by actively managing
the portfolio. Influenced by his father and Tom Broadus, he learnt both the way of focusing
on good companies with buy and hold strategy and a cut loss strategy which is managing the
investment actively. Hence, he decided that his portfolio will only consists of the companies
with good performance, the criteria that he focuses on are the durability of the company,
sustainable earnings-per-share growth, above-average price-earnings ratio to achieve the goal
for long term growth or wealth accumulation. He believes only the companies with those
strong fundamentals allow the wealth to compound for long term.

Being factual, it had shown that although the majority of the actively managed portfolios did
not manage to beat the market, but Larry Puglia had managed to do it. Based on the data or
past record of Puglia’s Blue-Chip Growth Fund, the wealthy individuals should invest into it
because the fund had also been recognized as an IBD Best Mutual Funds 2016 Awards
winner by Investor’s Business Daily (IBD) in 2016 but still many observers find it
incomprehensible on Larry Puglia’s investment method as the current market are efficient
where the information can be obtained easily and trades can be opened easily. Some
concludes Larry Puglia’s consistent success on outperforming the market as lucky, but I
believed in his company filtering method. He works together with a reputable global research
team that consists more than 250 industry analysts, and even the portfolio managers from
other funds to pick out the ‘strong companies’ from more than 2,300 public companies in the
global markets.

His own firm had also been actively in recruitment and mentoring to help develop those
talented investments analysts, providing them experiences and skills to be a portfolio
manager. This will ensure the sustainable of his firm thus ensuring the firms to always have
fresh new talent. Larry Puglia will even look for the other portfolios to update himself as he
believes there’s always some people who are better than him.

Based on the statistics, since the launching of this fund from 1997, the T. Rowe Price Blue
Chip Growth Fund had been showing the public its notable result of performing better than
the Standard & Poor’s 500 Index (S&P 500), which is the funds’ benchmark. The fund had a
23 years average annual return of 10.12% compared to 9.12%, S&P 500 under the lead of
Larry Puglia as a sole manager for this open-ended fund. This had clearly shown Larry Puglia
has the capability to generate a good return for his portfolio which is beneficial for the
investors.

Next, the companies he picked are those sustainable and notable such as its largest portfolio
weight, Amazon followed by Facebook, Microsoft, Alibaba etc. The companies picked by
Larry Puglia might lead the portfolio seems volatile but in a long run there is high chance for
them to perform as Larry picked them based on the strong potential growth and the
management team of the company.

In conclusion, an investment had run for a long period to generate some satisfying return no
matter it is “buy and hold” or “short term trade” strategies. I believe there are no scalpers or
traders for short term trades can always have a 100%-win rate with their strategies, there will
always be losing trades. Usually, their strategy is breakeven their number or winning and
losing trades but with a good reward return ratio which will lead their earnings to be more
than losses. As an advisor, I will first explain the pros and cons for investing in it,
understanding their risk tolerance level, investment expectations, their liquidity. If everything
suits their favour, then I will suggest them to pick this Blue-Chip Growth Fund.
References

MorningStar 2020, T. Rowe Price Blue Chip Growth portfolio, viewed on 15/02/2021,

<https://www.morningstar.com/funds/xnas/trbcx/portfolio>

MorningStar 2020, T. Rowe Price Blue Chip Growth perfomance, viewed on 15/02/2021,

<https://www.morningstar.com/funds/xnas/trbcx/performance>
Appendix

Appendix 1

Appendix 2
Appendix 3

Appendix 4

Appendix 5