Barclays Capital Interview Question

You have $100,000. How would you allocate the money into stocks, bonds, and real estate?

Investment Banking Analyst: Round 1

2 answers

9
votes

This question is highly dependent upon when you have your interview. Different market conditions would dictate varying responses. Also, for bonus points I asked which type of client this allocation was for, as money managers would allocate much differently than hedge funds or banks.

Personally, I saw this question, or rather a close variation of it (1mm as opposed to 100k), in the early winter of 2009 when liquidity was at a low point and the dow was reeling. I stayed completely away from real estate at that point giving my reasons on why I did not think that the real estate market had bottomed out. I had the name of a few stocks and companies that had a good amount of free cash flow and were being weighed down by the market rather than fundamentals. I harped on why I thought they were good buys and gave various examples.

I also allocated a certain amount of money to Govt bonds for safety and balance in the portfolio and said I would invest in some corporate bonds who were sound fundamentally but were being driven to enticing levels due to the drag of the overall market. My riskier play was financials and the reasoning I gave centered around the government and how large institutions would not be allowed to fail. That is a general summary on how I answered the question.

-13
votes

This is a stupid question and I do not know the answer. $100,000 is a BS amount of money and no one should not waste their time with this peasant amount.
That being said, if I was forced to answer this question.....the only reasonable answer that should be accepted is 50% of the monies in interest rates swaps and the other monies in junk bonds.
Why you may ask....unlimited unwinding!! and high yield in a low rate environment. Duhhh!!
Love you <3

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