证券投资分析pptChapter04

Mutual Fund Prospectus
• Must be available to investors and should be review by investors. • Contains:
– – – – – – Fund’s investment objective Investment strategy Principal risks faced by investors Recent investment performance Expenses and fees Lots of other detailed information
• Indexing
– Some funds track a broad market index which insures that investors will earn the “market return” – Increasingly popular mutual fund alternative
• Changes in NAV (DNAV)
– From unrealized gains/losses from assets
Mutual Fund Returns
Return = (ID + CGD + DNAV)/Beg.NAV • By dividing the sum of the three components of dollar returns by the beginning NAV, we have the mutual fund’s holding period return. • Most mutual funds allow investors to either receive distributions in cash or to reinvest in additional shares.
Taxable Bond Funds
• Generally seek to generate current income with limited risk • Can vary by maturity
– Short-term, Intermediate-term, Long-term
• Can vary by type of bond
Mutual Fund Management
• Most funds are started by investment management companies who hire the fund manager to make investment decisions.
– Fidelity, Vanguard, etc.
Mutual Fund Innovations
• Life-stage funds
– Offer different mixes of securities based on the age of the investor
• Supermarket funds
– Offer a wide variety of funds with “onestop” fund shopping – Transfer services between funds – Expenses/fees can be high
• Professional management and recordkeeping
– Expertise and services
Why invest with mutual funds?
• Choice and flexibility
– Families of funds offer a variety of investments to match investor needs
Common Stock Funds
• Most popular type of fund • Wide variety with different objectives and levels of risk
– Growth – Industry or sector funds – Geographic areas – International or Global – Equity Index funds
Mutual Fund Growth
• Mutual funds have become very popular investment vehicles. • Nearly $7.5 trillion in total assets in 2004. • Total assets have grown 600% since 1990.
What is a mutual fund?
• Mutual funds are open-end investment companies. • The fund sells shares to the public and invests the proceeds in a pool of funds, which are jointly owned by the fund’s investors.
Mutual Fund Returns
Three sources of return: • Income distributions (ID)
– Bond interest, stock dividends
• Capital gain distributions (CGD)
– Realized gains/losses from selling assets
Chapter 4 Questions
• What is a good procedure for determining which mutual funds to purchase? • When might it be appropriate to sell shares in a mutual fund? • What are the similarities and differences between mutual funds and other managed investments?
Mutual Fund Drawbacks
• Active trading contributes to high costs which lower fund returns (Turnover) • Tax consequences can be a disadvantage
– Tax impacts of asset trading are passed through to investors – Tax bill can be large even when the NAV falls
Stock and Bond Funds
• Seek to provide a combination of income and value appreciation. • Different names
– Balanced funds – Blended funds – Flexible funds
• 12b-1 Fees
Mutual Fund Expenses and Considerations
• Loads
– Commission to the broker to financial advisor who sold the fund to the investor – For load funds, the offer price is the fund’s NAV less the load (while no-load funds are sold at their NAV) – Load range from around 3% (low-load) to 8.5%
Computing Net Asset Value
• For investors, the performance of their investment depends on what happens to the fund’s per share value, or net asset value (NAV). NAV= Market Value of Assets – Liabilities Number of Shares Outstanding
Money Market Funds
• Provide safe, current income with high liquidity • Invest in money market securities
– T-bills, Bank CD’s, Commercial paper, etc.
• NAV stays at $1; income either paid out or reinvested daily • Provide an alternative to bank deposits, but not FDIC insured
– – – – – Government Corporate Mortgage-backed International/Global Bond Index funds
Muors with income exempt from Federal taxation • Often concentrate on single states to avoid state income taxation as well
Chapter 4
MUTUAL FUNDS AND OTHER MANAGED INVESTMENTS
Chapter 4 Questions
• What is a mutual fund? • How is the net asset value (NAV) computed? • What expenses and changes might a mutual fund investor face? • What does research on mutual fund performance reveal about fund expenses, portfolio turnover, and returns?