Investment Class
Part I
A.
Funds overall rating
The overall rating is a 5 star.
What this tells about the funding
This means that it is one of the best performing mutual funds and has a lower risk penalty rating.
B What does this indicate about the fund’s mix of stocks and bonds?
This means that the funds are balanced out in categories that provide investors with a mix of stocks and bonds to allow their capital to appreciate and pave the way for diversification, income, and other retirement plans.
Why an investor needs to know
This is important for the investor as it makes them aware of their equity investment based on their contributions to the funds. These categories are important for the investor as they become relevant and reflect on the exact product they invest in with different gradations of equity to bond exposure.
The average annual return of the fund at
1: +19.29%
5: +11.26%
10: +10.49%
Why is the above information important to the investor:
This information is important as it provides an overview of the progress in the mutual fund business’s performance. Strahilevitz (2020), notes that information about average annual returns allows the investor to weigh the risk of investment, enabling them to hold an investment for a specific goal in a specific time by gauging whether it is beneficial or not to invest.
- Amount of risk assessment for investing in the fund
An analysis of the fund reveals that risk assessment affects the amount of asset allocation. It is apparent that foreign stock markets and equities are volatile and therefore termed as high risks compared to the domestic equities, which are relatively safer. Therefore domestic equities receive a higher percentage of funding (63.78%) than International equities at 6.9 percent. Bonds appear to be relatively safer, receiving a fair 27.66% of asset allocation. The fund category depends on the amount of risk to avoid losses because of the higher risk, the higher the chances of losses.
- What other data would be important.
Average annual returns: This is important as it depicts the fund’s general performance and its ability to generate income, which is the main investment goal.
Portfolio data churnings. This is important because if there is an increase in costs, one is likely to miss out on the long term opportunities over a specific duration.
Specific sectoral allocation: This makes the investor wary of the performance as an investment in unpopular sectors may risk underperformance, resulting in losses.
Part II
A fund I would consider investing in and why
After researching a favorable mutual fund through the website, I would consider investing in Wells Fargo Index Asset allocation Fund (SFAAX). This is because it has a five star Morning Star rating, which means that it is one of the best mutual funds with a low-risk penalty rating. Secondly, it has had a positive annual return rating of +1781%at 1 year,+11.27% in 5 years, and +10.37% in 10 years, indicating the consistency in performance.
This answers the three fundamental questions: where the fund has a 5 star overall fund rating, a positive long
References
Fundresearch.fidelity.com. 2020. Mutual Fund Results – Mutual Funds Research | Fidelity Investments. [online] Available at: <https://fundresearch.fidelity.com/fund-screener/results/table/overview/averageAnnualReturnsYear3/desc/1?
Strahilevitz, M. (2020). 7 Best Fidelity Mutual Funds to Buy and Hold.