Purpose of this case : To devise an optimal investment strategy and asset allocation framework to best serve the UK’s economic interests following withdrawal from the EU.

While BNSF is fictional, real data from the UK is used to frame the discussion surrounding current socio-economic and political conditions. To separate fact from fiction in this case, sources and notes are all provided in the final section highlighting fictional and factual components. Monetary amounts in this case are denominated in Pound Sterling (£).

What is British National Strategic Fund (BNSF)?

A fictional sovereign wealth fund (SWF) responsible for managing £50 billion of assets of

the United Kingdom (UK). As part of its exit from the European Union (EU) or “Brexit” in January 2020,the UK is currently in a transition period ending on December 31, 2020 to negotiate a trade deal with the EU.To address potential economic shortcomings and decreased levels of foreign direct investments, the government has approved the creation of the country’s first SWF

Objective of this case: BNSF has a mandate to promote British economic independence and the long-term well-being of the British population. However, fund managers are concerned that a lack of geographical diversification and focus on supporting low-income business segments may negatively impact investment returns in the long run.

Given the unprecedented nature of the task before them, the BNSF board decided to hire your investment consulting firm to advise them on the following:

How should BNSF design its investment strategy and asset allocation framework to support the UK’s long-term economic development objectives?

You are expected to present a long-term asset allocation strategy for the first £20 billion issuance in the first quarter of 2021, while fulfilling BNSF’s triple mandate.

Triple Mandate

1)Promote Economic Independence of UK

2)Promote Long Term Well Being of British Population

3)Maximize risk adjusted returns

The following sections provide information that illustrates the complexity of this task. BNSF is actively monitoring the UK’s economic change surrounding Brexit, as well as the growing trend of non- commodity SWFs around the world. The fund mandate is further complicated by existing trade-offs and uncertainties around the UK industries. Finally, the seven BNSF board members all have varying perspectives on BNSF’s triple mandate. These members will jointly evaluate and vote on your proposal at the upcoming meeting in November 2020

• How to combine profits with social equalities?

• The fund can promote economic independence of UK, long term well-being of British population and maximize risk adjusted returns

• Propose an investment strategy for the first instalment of 20 pounds

• New type of sovereign wealth fund

• Difficult to manage triple mandate

• Make long term positions decisions in a changing world

• Think about how finance can have positive impact on society

• quality of report, analytical rigorous of the proposal and ability of the proposal to solve the problem

• Be clear about the assumptions you make

Look for win-wins

• triple mandate involves tough trade offs

• How can you find win-win solutions that make all stakeholders better off?

• They care about feasibility of the proposal

• Does BNSF have what it takes to implement the proposal?

SAMPLE ASSIGNMENT

Sample-2