Assignment: 1) Go to Yahoo.finance or another FREE website. You can also try Mor

Question

Assignment: 1) Go to Yahoo.finance or another FREE website. You can also try Morningstar.com

2) Look up your ticker symbol of a mutual fund you are interested in. You may need the wall street journal to find some, or not, it is up to you.

3) Find the following: a) 1 year return b) 1 year high price c) 1 year low price d) Morningstar rating e) Morningstar style box (what type of fund is this) f) Expense ratio (is it higher or lower than the average) g) Fund summary h) Top 5 holdings (list the companies not the ticker symbols)

4) Would you invest in this fund – why or why not

5) Why did you choose this particular mutual fund to use for homework.

6) What does a Morningstar rating mean – what is the highest, what is the lowest?

7) Describe what the Morningstar style box indicates for your particular mutual fund

8) What are two advantages of investing in mutual funds

9) What are two disadvantages of investing in mutual funds

10) If you were ready to invest, would you choose mutual funds or stocks? Explain your reasoning. (there is no wrong answer) How much did this fund cost in 2005 and what is the 10 year rate of return on this mutual fund?

Explanation / Answer

Note: Have used Yahoo.finance

The mutual fund i am interested in is Vanguard Equity Income Fund (ticker : VEIPX)

One Year return is 3.6%,

One-Year high Price is 31.16

One-Year low Price is 29.95

The fund has five star morning star rating,

The fund comes under Large Value type in the morning star style box,

The expense ratio is 0.58% which is much lower than the average of 2.5% maxium,

Fund Summary:          Net Assets: 20.76 Billion

                                    Yield: 2.79%

                                    YTD Return: 4.58%

                                    Previous Close: 31.01 (as on 27th May 2016)

Top 5 Holdings:

Microsoft Corp 4.72%

Johnson & Johnson 3.29%

General Electric Co 3.13%

Wells Fargo & Co 2.97

JPMorgan Chase & Co 2.86%

I would definitely invest in this fund. This fund suits my investment goals. the fund has slow growing but high yeilding companies. As i am a long term investor, this fund is really good for me and my long term investment goals. Fund has more concentration on equity.

I choose this mutual fund for homework because this fund is good for investors who are long term investors and are not affected by the volatility in the markets. I am a promoter of type of investing which involve investing in value companies which are good in the long run.

A research firm Morningstar gives ratings to publicly traded mutual funds and exchange traded funds which is called as morningstar ratings. The ratings are given as stars. Funds with one star being the poorest and funds with five stars being the best.

The morningstar style box indicates that the fund selected by me comes in the type Large Value. Large means the size of the stock included in the mutual fund. Value is the investment valuation of the stock. Meaning all the stocks included in the fund are of large market capitlisation and are value stocks.

Advantages of Investing in mutual funds:

1) It is relatively easy to get in and out of a mutual fund.

2) Asset diversification can be achieved through a mutual fund.

Disadvantages of a mutual fund:

1) As it is easy to get in and out of mutual fund, a lot of investors remove and put in cash daily.

2) Lot of charges as fees and comissions by management.

I would like to invest in stocks. Mutual funds are govern by fund managers and their stock picking may not always be correct. Some mutual funds are comlicatedly designed by managers which are not always giving good returns.

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