Investors who cannot financially afford to purchase large numbers of individual securities can achieve diversification benefits by investing in mutual funds. But how do individual investors evaluate the over10,000 funds that are available to investors? The library provides individual investors with the necessary resources to compare and evaluate mutual funds. One important source of information are Morningstar Open-End Funds. More current information is provided by Barron's, The Wall Street Journal, and Investor's Business Daily.
The purpose of this assignment is to acquaint the student with some of the sources of mutual fund information.
Requirements:
I. Find descriptive information for three open-ended mutual funds that are from different fund families; (e.g., American Funds, Scudder, Fidelity, etc.). We will do one example in class. I'll give you some choices for the second fund. For the third fund you should go to the library and look up one additional fund.
II. Fill in the information required for each fund in Table C. Some of the above requested information may not be available for all funds. In the Table indicate that the information is unavailable with NA.
III. Read the Morningstar analysis for each fund.
IV. Describe the type of investor who would be best suited to invest in each mutual fund. Consider individual's risk preferences, current income preference, capital gain preference and active versus passive investor
V. Which fund has the lowest expense ratio? Which fund has the lowest portfolio turnover percent?
VI. Internet Requirement #1. The internet provides the a variety of information for mutual funds. Most of this information is provided by the investment company. Use www.morningstar.com or similar site that provides the current price data for the three funds recorded on Table C. Print out the graph or price data for the 3 funds recorded on Table C.
VII. Internet Requiremen#2 Using www.morningstar.com, go to the Fund Selector and choose one of the pre-set criteria to screen mutual funds. Turn in a printout of the screenwith Table C and the answers to questions IV, V, and VI above .