Find Analyze And Describe Your Favorite Mutual Fund – Coursework Example
Portfolio Management Given the $100, 000 for investment, the allocation to each would as below. Asset
It is common knowledge within the financial markets that bonds are less volatile compared to funds with large cap. These two investment strategies shall be in for the long haul as long term investment provides more income and increased probability of price growth.
Fidelity Nasdaq Composite Index Fund
The first choice is large-growth US equity with 5 stars morning star ratings, high returns only, average expenses and managed by Deane Gyllenhaal who commenced on September 30th this year. The result as shown by the system is quite impressive, as it will be the Fidelity Nasdaq composite index funds with a year to date daily returns of 11.79%. The top three holdings for these funds include the following; Apple Inc, Microsoft Corp and Google Inc, carrying a combined weight of 17.68. In the first year the projected returns from the fund will be 20.38%, in the third year it will grow to 24.35% then after 5 years it would dip to 17.32%. Hence a three year investment would be ideal for this fund. The volatility prediction is pegged at 12.85 for the fund with a beta of 1 and a correlation coefficient of 1, and a Sharpe ratio of 1.77 shows that the investment is lock step balance with the market
Fidelity California Municipal Income Fund
The second choice fund would be stable income municipal bond; particularly the Fidelity California Municipal Income fund, managed by Jamie Pagliocco a veteran in the game, with an expected year to date daily returns of 9.71%. The top three holdings of this fund include the following; California St Various P 6%, California St Econ Recover Economi 5.25% and Sweetwater Calif Un High Sch D Go 5.625% with a combined weight of 3.78. In the first year, the returns that are expected would be 9.15% in the third year it will be 5.84%, and 5.38% in the fifth year and finally 4.72 in the tenth year. The risks from the fund would be would be a standard deviation of 4.06, a Sharpe of 1.4, a beta of 1.05 and a coefficient of correlation of 0.99 showing a relatively stable investment.
From the personal appraisal of the video provided, it is very clear that investment in funds with potential high returns carries a lot of potential risks, and the same applies for investment in low expected returns as there is a corresponding low risks. This is the moral of the research in the video and that of fidelity mutual funds.