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Assignment for Module 10A1
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with M10A1 in the subject heading.
Choices of Mutual Funds
Because
there are over 25,000 different mutual funds offered by hundreds of
management companies, you will need to limit the
categories of funds in
which you are interested. Read the section in Module 10 on
types of
mutual funds. Types are the categories like Large-cap value.
- The
major criteria is your risk factor, followed by the purpose of
the fund.
- Are
you risk adverse but want to preserve capital for the
short-run? Then you may want to check into government security
bond funds or even a money market fund.
- Are
you a moderately conservative investor who wants to hold a
fund for a number of years, possibly as an IRA? You may wish
to look into the balanced or income/equity funds or hybrid
funds.
- Are
you a high risk investor who is interested in funds with high
growth potential over the next 2 to 3 years? You would be more
interested in the aggressive growth funds or some of the value
funds or a fund specializing in small-cap companies.
- Perhaps
you want some risk but you are not sure an aggressive fund is
the right idea, there are many growth funds which focus on the
major large cap companies which could be less speculative than
the aggressive growth funds.
- There
are a number of specialty funds which focus on just one
industry such as health, energy, finance or high-tech.
If you have a special interest in one sector then the
specialty funds may be of particular interest to you.
- After
looking over the definitions provided in Module 10, identify
two or three categories in which you believe
you would be comfortable investing. Please do not use
money market mutual funds or bond funds as these have no analysis
associated with them. You might prefer these types of mutual
funds for your own strategy but for the next 3 modules these are
irrelevant.
- Write up a small
document explaining your choices along with a small brief
explanation as to why you want to consider these
categories. You do
not have to
identify any specific funds only broad categories.
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