Investments

advertisement
Mutual Funds and Investment Companies
Services of Investment Companies
Types of Investment Companies
Types of Mutual Funds
Cost of Mutual funds
Return of Mutual Funds
Exchange Traded Funds
Ch4 – MBA 567
1
Services of Investment Companies
Administration & record keeping
Diversification & divisibility
Professional management
Reduced transaction costs
Ch4 – MBA 567
2
Net Asset Value
Used as a basis for valuation of
investment company shares
Selling new shares
Redeeming existing shares
NAV=
Market Value of Assets - Liabilities
Shares Outstanding
Ch4 – MBA 567
3
Types of Investment Organizations
Unit Trusts
Managed Investment Companies
Open-End
Closed-End
Other investment organizations
Commingled funds
REITs
Hedge Funds
Ch4 – MBA 567
4
Open-End and Closed-End Funds
Shares Outstanding
Closed-end: no change unless new stock
is offered
Open-end: changes when new shares are
sold or old shares are redeemed
Pricing
Open-end: Net Asset Value(NAV)
Closed-end: Premium or discount to NAV
Ch4 – MBA 567
5
Investment Policies
Money Market
Equity
Specialized Sector
Bond
Balance & Income
Asset Allocation
Indexed
International
Ch4 – MBA 567
6
Costs of Investing in Mutual Funds
Fee Structure
Front-end load
Back-end load
Operating expenses
12 b-1 charges
distribution costs paid by the fund
Alternative to a load
Fees and performance
Ch4 – MBA 567
7
Example
An open-end fund has a total asset of
$120 million and a liability of $10 million.
It has 10 million shares outstanding.
What is its NAV? It is sold with a frontend load of 5%. What is its offering
price?
Ch4 – MBA 567
8
Fund Returns
Page 106
A sophisticated example:
Problem 4.16 on page 121
Ch4 – MBA 567
9
Table 4.2 Impacts of Costs on Investment Performance
Ch4 – MBA 567
10
Exchange Traded Funds
ETF allow investors to trade index
portfolios like shares of stock
Examples - SPDRs and Webs
Potential advantages
Trade continuously
Lower taxes
Lower costs
Potential disadvantages
Ch4 – MBA 567
11
First Look at Mutual Fund Performance
Average mutual fund performance is
generally less than broad market
performance
Over certain horizons there is
persistence in positive performance
Evidence is not conclusive
Some inconsistencies
Ch4 – MBA 567
12
Figure 4.3 Diversified Equity Funds versus Wilshire 5000 Index
Ch4 – MBA 567
13
Sources of Information on Mutual Funds
Wiesenberger’s Investment Companies
Morningstar (www.morningstar.com)
Yahoo (biz.yahoo.com / funds)
Investment Company Institute
(www.ici.org)
Popular press
Investment services
Ch4 – MBA 567
14
Download