Client Mutual Fund Portfolio

General Description:
Each student prepares a retirement plan for his/herself to be presented to the class. The project requires the application of the principles of investments, financial planning, and retirement planning. The project will involve extensive outside research, a written narrative and an accompanying oral presentation. The narrative must answer all the listed items, calculations should be attached to the paper, and printouts of mutual fund statistics should be included. The analysis and discussion of the results should be at least 5 pages in length, not including charts, graphs and financial data. The presentation should have a discussion of the effect of age on asset allocation and risk undertaking. Students should adhere to proper inclusion of research information within the body of their project. APA style citation should be used.

Specific Requirements for Narrative Portion

The client investment portfolio must be word-processed containing the following segments in the order noted:

1. Discuss the factors that affect the development of an investment portfolio, such as the client’s age, risk tolerance, retirement goals, and retirement income needs. Write at least one page explaining the effect of each of these factors on the development of the portfolio.

2. Assume that you have $100,000 to invest for your client.
Visit the website and complete the questionnaire under Asset Allocation Planner, from your retirement plan’s point of view. The questionnaire will give you a suggestion for a target asset mix based on your answers; it basically gives you recommendations for weights of various types of fund categories. If you desire, you may allocate the money among those fund categories using the recommended weights but remember you must use at least 5 asset types for this exercise.

3. Pick at least 5 no load funds, each with different objectives such as “growth”, “growth and income”, “capital appreciation”, “international” etc. or objectives based on the fidelity target mix suggestions***. You can mix and match fund companies. Example: Janus, Fidelity, Vanguard, AIM, etc. Please DO NOT invest in money market funds, and do not split the money evenly among the 5 funds, because that would defeat the academic purpose of this project. (Prepare a fund allocation table, listing the fund’s name, symbol, objective, the weight of the investment, i.e. $15,000 means 15%, the current share price and the number of shares purchased based on the allocation)

4. For each fund answer the mutual fund questionnaire.

***P.S. the fund must have a 10-year history to be included in this project. Be sure to meet this requirement.

5. Calculate the 10-year compound rate of return for each fund using information on websites such as:
Example for Magellan (Fidelity):

1+ (the 10-year compound rate of return)
for the ten year period [Jan. 1, 1991-Dec. 31, 2000] =

[(1-.0929)(1+.2405)(1+.3363)(1+.2659)(1+.1169)(1+.3682)(1-.0181)(1.2466)(1.0701)(1.4103)]^^.1
2000    1999       1998    1997    1996    1995    1994    1993    1992 1991

[(.91)(1.2405)(1.3363)(1.2659)(1.1169)(1.3682)(.98)(1.2466)(1.0701)(1.4103)]^^.1
2000 1999    1998    1997 1996 1995 1994 1993 1992    1991

[ 5.38]^^.1 => 5.38yx .1 =1.18 =>10-year compound return =1.18-1=18%
(calculator)

6. Calculate the weighted average return of your portfolio.
Portfolio Return = W1R1+W2R2+W3R3+W4R4+W5R5, where W(i)=Weight of fund (i) in your portfolio, and R(i) is the 10-year compound rate of return for each fund.

7. Obtain the 10-year Beta of each fund at the end of the most recent calendar year.
please add the Beta of each fund to the table mentioned in item # 3
Calculate weighted average Beta of the portfolio =W1B1+W2B2+W3B3+W4B4+W5B5

8. Calculate the risk adjusted return on your portfolio using the Treynor measure:
Treynor= Rportfolio - Tbillrate <--- use 3% unless instructed otherwise.
Beta(portfolio)

9. Explain the effect of international funds on risk reduction, at least page

10. References (must use APA format) ALL REFERENCE MATERIALS MUST ACCOMPANY THE PROJECT.

Final Table Format Due with the Paper

Fund name, Symbol, objective, weight, 10 year compound return, Beta
The table should end with the portfolio weighted average return, weighted average Beta, and Treynor’s risk adjusted return

Client Mutual Fund Portfolio General Description: Each student...