Stock Track Project Case Solution

Investment in 2 mutual funds and 2 bonds

Investment in Mutual funds:

The mutual fund is the pool of funds collected for the purpose of investment in securities such as: stocks, bonds, money market instruments, or similar assets. The investment in mutual funds is more profitable than investment in separate stocks because risk factor and beta, which is low in mutual funds as compared to single stocks. There is also disadvantage that the funds are collected from different investors and the return will be distributed based on certain weightage of their investment.

The first mutual fund is selected as PIMCO Fds (PTTAX) because its stock price is continuously increasing (as shown in its graph) so it is better to invest here, this increases the expected return in future. Its net asset value is 10.22, its return are better than returns from others, as it announces 0.60% in 4 weeks, 2.63 in 13 weeks and 2.98% yearly. Its yield is 2.83%.

Another mutual fund for investment is selected as: Fidelity Contra Fund (FCNTX), it shows same trend in its momentum of pricing and the price is closed at 96.99. It is expected that it might give certain better returns. In addition, the selection decision is made on net asset value, which is $ 97. Although, its yield is negative at -2.03%, but it will be useful if we invest for long period of time that is expected to give return of 9.71% in 13 weeks and up to 5 years it would give 11.26% return.

Investment in Bonds:

The bonds are a long term debt instrument through which investor invest money and borrow a large amount of funds on either fix rate, or fluctuation rate. The rate is somehow fixed and it fluctuates depending on the price of oil and market conditions (either economic or political)

For investment in bonds, the first bond is selected as Apple Inc. (AAPL), as it is better for investment as well as its bond yield is favorable to invest in as it gives return of 2.52%. Another bond for investment is selected as PIMCO, as it gives return of 2.32%.

Along with this, we have to consider other things such as coupon payment is received on yearly basis, and it should be greater than interest expense.

According to Motley Fool, investment is not only the amount invested in a particular asset but an investor devotes his time, resources, and efforts in order to achieve the good return. As an active investor; the investment in stocks, mutual funds, or bonds is picked and can be changed after a certain amount of return is received. Fool also identifies that the some amount should be kept in side, as more cash in hand would enable to generate more wealth.

The strategy is chosen as “Invest like the Masters”:

Growth centric strategy, which focuses on investment in those companies that result in growth and easy understanding of market. It consists of three main factors, which are:

  1. Invest based on available information: analyze the company position where you want to invest, along with its nature of business, products, and services offered and review the financial statements for favorable returns.
  2. Seek hidden gems: Decide whether to invest in small capital stocks or large capital stocks depending on the pricing. As small cap stocks, are mostly mis-priced or underpriced. Therefore, it is better to invest in large cap stocks.
  3. Diversity: decide the company and then decide the portfolio that would give you higher return as bonds in terms of YTM and stocks in terms of return……………                                                                                                                                                        This is just a sample partial work. Please place the order on the website to get your own originally done case Solution


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