Analysis.of.Pioneer.Funds.Powerpoint

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Pioneer Funds
To Choose or Not to Choose
An Analysis of an ORP
Introduction

Purpose of Project
–

Who is eligible & Risks of ORP?
–
–

Evaluate returns for those participating in the ORP
provider’s fund offerings
Investment strategy, tax situation, style of manager
Manage own investments
Temporal & Index Benchmark of Pioneer Group
–
3 yr returns on S&P 500 Index
Important Aspect of Mutual Funds

What is a mutual fund?
–

Why you should invest in a mutual fund?
–
–

“Pool of money”
Diversify risk
Time and Fund Management Expertise
Disadvantages of mutual funds?
–
–
Limits potential gains
Diminished returns due to commission & fees
Types of Mutual Funds

Low-to-Medium Risk
–
Money market funds
o
–
–
Minimal trading activity
Balanced funds
o
–
High diversification
Index funds
o
Grow capital, generate income
Large cap funds
o
High Risk
–
ST securities, low rates
Fund of funds
o
–

Example: Wal-Mart
Pure bonds
o
–
Small cap funds
o
–
Keep principal until maturity
IPO, no dividends
International funds
o
Volatility financial mkt. abroad
History of Pioneer
“Pioneer
Fund” founded in 1928 by Philip
Carret
Philip Carret
–friends
with WARREN Buffet
–Wizard of the market
–13% average return in 55 yrs
Pioneer Today





Pioneer today is owned by Uni Credito
Italiano Banking Group based in Milan
Pioneer Investments has 180 investors in 4
cities: Boston, Dublin, Milian, and Sinagpore
Investment in the US $35 Billion
Investments in the World $150 Billion
Approximately 40 different funds.
Evaluation Method

Three methods
–
Morningstar “Star” Rating

1-5 stars
–
–
Compare to S&P
–
–
Takes into account relative risk adjusted return over
multiple time periods including all fees and expenses
for 3 year return
Compare to Benchmark
–
For 3 year return
Pioneer Star Rating
16
14
12
10
8
# of Funds
6
4
2
0
1-Star
2-Star
3-Star
4-Star
5-Star
NR
Pioneer Funds vs. Benchmarks
(3 Year Returns)
Pioneer vs. Specific Benchmark (3 Year Returns)
Return % Against Benchmark
12
7
2
-3
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
V
W
X
Y
-8
-13
Fund Name
LEGEND
A = Small Company
H = International Equity
B = Global High Yield
I = Balanced
C = Mid Cap Growth
J = Fund B
D = International Value
K = High Yield
E = Growth Opportunities L = Research
F = Pioneer Small Cap Val M = Growth Shares
G = Europe
N = Value
O = Mid Cap Value
V = Municipal Bond
P = Equity Income
W = Bond
Q = Tax Free Income
X = Europe Select
R = America Income
Y = Strategic Income
S = Cash Reserves
Z = Emerging Markets
T = Real Estate
U = California Tax-Free Income
Z
Pioneer Fund Expense Ratios
2.5
2.32
1.78
2
1.50
1.5
1.00
1
Pioneer Avg.
Industry *
0.5
0
Equity
Fixed Income
* Based on American Association of Individual Investors (AAII) recommendations
Conclusion
its in the results




High expense ratios
Under performed the S&P 500 index
Under performed temporal benchmarks
Low Morningstar ratings
–

Some non-existent
Low management tenure
–
Recently purchased by a large banking group
Conclusion
Limitations


Data collected using only Morningstar and Pioneer’s
websites
Needs a comparison to other ORP choices
–

Results tend to support EMH
–
–

May not be the worst of the worst
Too small of a sample to make assumption
Only 40 funds analyzed
Analysis can not account for luck
–
Good or Bad
Conclusion
Recommendation



Pioneer funds should not be chosen for an
ORP
All ORPs should be evaluated
Best choice may be an index strategy
–
Not an actively managed mutual fund strategy
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